Fiscal Policies Review August 27- Sept 3, 2018
Following the Governments’ claim on August 24th that the President attempts to block the adoption of the first budget adjustment this year, by refusing to immediately convene the Supreme Council of Defense (CSAT), thus allegedly jeopardizing the complete and timely payment of pensions, allowances, salaries of public employees, as well as the provision of medical services and ensuring citizens' safety, the Presidency announced on August 24th that the Secretariat of the CSAT has already initiated the procedures for issuing a Council decision on the rectification of the state budget of the institutions with responsibilities in the field of national security for 2018. According to the same source, President decided to convene the CSAT on September 4th since the individual agreement of all Council members required by art. 6 par. (3) of the Law no. 415/2002 for issuing decisions has not been met. On the same date, President Klaus Iohannis declared that “the Government can pass any budget adjustment without CSAT’s notice […] with the exception of the field of national security.”


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Fiscal Policies Review August 20 - 27, 2018
            One month after PM Viorica Dăncilă announced the budget adjustment (August 2), and the Ministry for Public Finances put up for debate the Government Ordinance (August 6), the Gov’t still has not pass it. Met with harsh criticism by the Presidential Administration (PA) over the sums allotted to the Presidency, the adjustment still awaits CSAT’s notice. As announced on Friday, August 24, the Supreme Council of National Defense (CSAT) was summoned for September 4; the main point on the agenda, the budget adjustment.


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Fiscal Policies Review August 13 - 20, 2018
The budgetary adjustment was postponed for the third week in a row. The adjustment was first presented by PM Viorica Dăncilă although FinMin Teodorovici initially announced that it would be adopted by the end of July. Last Saturday (August 18) Darius Vâlcov, advisor to the PM, announced the new delay. The Government Ordinance on the adjustment needs the notice of the Supreme Council for National Defense (CSAT) which has to approve the budget of the Presidential Administration, as well as the budgets of the Intelligence Services, budgets that were cut down by the Dăncilă Gov’t. So far President Iohannis did not summon the CSAT. The PM alongside 1/3 of the Cabinet can summon the CSAT, however they need to agree with the President on the agenda.


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Fiscal Policies Review, August 6 - 13, 2018
On August 6, the Ministry of Public Finances put up for debate the budget adjustment (general budget & social insurance budget). The official press release informs that the positive adjustment keeps under the deficit target (2.97%) with a GDP growth of 5.5%. In nominal terms, the GDP advanced to RON 945 billion from the initial estimation of RON 907.9 billion. As announced by PM Dăncilă in the sitting held on August 2 when the adjustment was first presented, additional funds go to local budgets (RON 1,125.9 million), Ministry of Health (RON 333.6 million), Ministry of Finances (RON 1,278.8 million), Ministry of Interior, National education, Transports, Agriculture, SGG, FNUASS, Social Insurance Budget. On August 6, the Central Bank decided to maintain the key interest rate at 2.5%. Two days later BNR Governor Mugur Isărescu presented the August report on inflation. The main message was against stimulating the demand, as it will lead to higher imports. The Governor also pointed out that the GDP growth is rather closer to the 4% tier than to the 5.5% announced by the Government. In the context of the budget adjustment and of the growing risk of exceeding the deficit, considering BNR’s warnings on inflation, the Government put up for debate the new Pension Law. According to Minister of Labor Lia Olguța Vasilescu, the retirement age remains unchanged. The pension budget will also have to be increased by RON 15 billion by 2022, Minister Vasilescu also highlighted on Friday, August 10, as “pensions will be doubled.”


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Fiscal Policies Review July 30 - August 6, 2018
In an interview for DCNews, FinMin Teodorovici argued that the minimum wage should only be enforced to public administration and not to private companies. Two days later, Minister of Labor Lia Olguța Vasilescu contradicted Teodorovici, stressing that the minimum wage will not be eliminated. On the other hand Teodorovici’s statement gained traction from the business environment, the Association of Romanian Businessmen calling for public debates on the issue of maintaining or eliminating the minimum wage. On Wednesday, August 1st, the Constitutional Court of Romania published the motivation behind the decision of unconstitutionality of the Draft Bill for the creation of the Development and Investment Sovereign Fund (FSDI). CCR’s decision highlights that regardless of the legal nature of FSDI, its establishment must be enacted as an administrative measure, (Gov’t’s decision) and not through a law adopted in Parliament. On July 18, the Court ruled that the Fund must be established through Gov’t Resolution. The National Council for SMEs (CNIPMMR) argued against the establishment of the Fund, deeming it illegal.              


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