Fiscal Policies Review, July 9 - 16, 2018
During a talk show from July 11, PSD president Liviu Dragnea expressed his dissatisfaction with some of his colleagues who discussed the issue of fiscal amnesty (FinMin Eugen Teodorovici announced on July 6 that his team is working on a fiscal amnesty mechanism). The PSD Chairman argued that this proposal for a fiscal amnesty must be address only when fully drafted and understood. Dragnea argued that Romania needs more than a fiscal reconciliation, as it also needs a “general, political and social, pacification”. According to Dragnea, this need was caused by the “internal and external siege the country has been under in the past year.” After the National Union Block (BNS) released data on the results of the ‘fiscal revolution’, the Labor Inspectorate issued a press release informing that the results of an official campaign show that some 95% of Romanian employers fulfilled their obligations following the transfer of social contributions from employer to employees. On July 9, BNS held a conference on the effects of GEO 79/2017 (contributions’ transfer). On July 11, Minister of Finances Teodorovici announced that he wants to remove the measure which freezes individuals’ accounts, a measure which he considers to be aggressive.  ·   A press release issued by the Government informs that the European Commissioner for Budget and Human Resources, Gunther Oettinger, accepted the invitation for a visit in Romania, invitation launched by PM Dăncilă. ·   During the Government Sitting of July 12, the Executive decided to postpone the deadline for submitting the Single declarations to July 31. ·   July 13, FinMin Teodorovici attended a work meeting with representatives of Croatia and Finland in Brussels (2019 – 2020 EU Council trio). ·   July 12, FinMin Teodorovici signed the Common Customs Administration Charter.   A draft emergency ordinance on amending art. 1 of GEO no, 109/2011 on Corporate Governance was put up for public debate by the Ministry of Economy.   Draft bill on approving GEO 113/2017 was promulgated by President Iohannis.   Draft bill on approving GEO 103/2017 was promulgated by President Iohannis. Law no. 163/2018 on the distribution of dividends was published in the Official Gazette. GEO no. 63/2018 on postponing the deadline for submitting the Single Declaration was published in the Official Gazette.   Calendar Public debate on the National Strategy for Sustainable Development takes place on July 23, 10:00 – 13:00, at Victoria Palace.   MFP discussions on the Fiscal Procedure Code: July 17: Solving challenges against fiscal-administrative acts & Administrative cooperation in the fiscal field.   MFP discussions on the Fiscal Code: July 19: IFRS 9 July 18: Excises July 17: VAT  


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Fiscal Policies Review, July 2 - 9, 2018
Continuing the debate around capping lending, BNR Governor Mugur Isărescu said that the main factor which limits lending is legislative uncertainty, while he explained that fiscal stimuli cannot continue indefinitely. Isărescu argued that the Romanian economy and market are reasonable and that perceived excesses are coming from an excessive presentation and debate in the media. FinMin Teodorovici announced “harsh” discussions over the budget adjustment began this week. Deputy PM Paul Stănescu presented it as a ‘positive adjustment’, so that everybody has money at least for salaries. The current account deficit, higher expenditures & stagnating economy should raise concerns. A press release issued by the National Union Block on Monday, July 9, presents the evaluation of the effects the transfer of social contributions had over the past months. Below are some of the main points presented by BNS: -   Some 50% of Romanian employers modified work contracts, while 24% have not made any changes. -   On March 31, 2018, 41.13% of full time contracts had the value of the minimum wage. -   Some 1.2 million employees had smaller incomes, and more than 600,000 were in danger of having them diminished. ·  July 3, Ministry of public Finances published the minute from the first consulting session with business representatives over the Fiscal Codes updates. ·  July 16 is the deadline for submitting the Single Declaration. ·  The National Institute for Statistics confirms the 4% economic growth for 2018 Q1. ·  BNR published for public debate the Regulation regarding the institutions authorized to issue electronic currencies.   ARRIVED   On July 5, the Draft bill for the approval of the general annual account for the implementation of the state budget, of the annual account for the implementation of the Single National Fund of Health Social Insurance, and of the annual general account of the 2017 public debt was adopted during the Government Sitting, On July 5, the Government adopted Draft bill on approving the annual general execution account for the 2017 social insurances budget and for the annual general execution account for 2017 unemployment insurances budget.   DEPARTURES On July 9, ANAF Order no. 1627/2018 to amend the Technical norms regarding the registration for border purposes of economic operators and other individuals, approved through ANAF Order no. 1886/2016 was published in the Official Gazette. On July 3,ANAF Order No. 1494/2018 for approving the procedure for establish by default the contribution to the social insurance and social health insurance funds owed by individuals was published in the Official Gazette.   Chamber of Deputies The Committee for budget, July 9, is expected to issue a report for the Draft Bill on offshore exploitation (Joint report with the Committee for Administration).   Committee for Industries – report on Access Economy Bill.   The Committee for legal matters, July 9, is expected to issue a report for draft bill on approving GEO 54/2010 on fighting against tax evasion, and a joint report with the Committee for Industries on the draft bill regarding the private-public partnership.      


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Fiscal Policies Review, June 25 - July 2, 2018
June 28. FinMin held the first consulting session with business representatives over the Fiscal Codes updates. FinMin Teodorovici chaired the session & stated that authorities “are open to any pertinent proposal coming from the business environment.” Contrary to the initial statements (April 2018, June 6, 2018), the FinMin made it clear that the legislative change is just an update to the existing Codes, a “consolidated version” rather than re-written Codes, and that the Gov’t cannot prevent MPs from amending & adding to the Codes. During the discussion, Teodorovici announced that the adoption of GEO 79 was postpone for this autumn, and that this week MPs will operate changes to GEO 25. Following discussions related to BNR’s intention to cap lending, on June 26, BNR Governor Mugur Isărescu offered more insight into the matter. While denying speculations over BNR's alleged plans to put a cap on lending, Isărescu highlighted that the Central Bank is interested in "a healthy lending, balanced on all its components, sustainable, and I cannot stress it enough, sustainable." Over the course of this summer, the Central Bank plans to hold talks with the Romanian Banking Associations and with non-banking authorities “so that lending becomes the engine of sustainable economic growth.” Deficit could reach 3.5-3.6% by the end of the year (Fiscal Council). This week Chamber of Deputies The Committee for budget, July 3, is expected to issue a report for the draft bill on GEO 25/2018 (income tax, VAT and excises); as well as the report on the Draft Bill on offshore exploitation (Joint report with the Committee for Administration). Committee for Industries – report on Access Economy Bill. Senate The Senate’s Plenum, July 3, votes on the legislative proposal regarding the Court of Accounts and the draft bill approving GEO 46/2018 on the National Office on Centralized Procurement. Gov’t Sitting GEO on NEETs (RON 2,250 paid to employers)  In Statements Ionuț Mișa, ANAF president, June 28, “Employer must give up on bonuses and increase gross wages, the social contributions bill will be promulgated”. Ionuț Dumitru, Fiscal Council president, June 29, “The budgetary deficit could reach 3.5% - 3.6% by year-end”. President Klaus Iohannis, June 28, “A Euro-zone budget is not a problem as long as it does not create a new fissure between Euro-zone countries and non-Euro ones”. Mugur Isărescu, June 29, “We had an economic growth which was among the top in the post-crisis period, almost 7%”. Mugur Isărescu, June 29, “The gold kept by BNR into the Bank of England account (…) remains our gold. (…) It did not even cross our minds to gamble our gold at the slots machines, as a character (i.e. Lucian Isar) suggested.” Overview   June 28. Gov’t Sitting, PM Viorica Dăncilă announced that the pension point increases by 10% starting July 1. June 28, the FinMin published the budgetary execution for the first five months of 2018. June 28. Gov’t approves Memorandum on Romania’s economic study. June 29, the Ministry of Economy published the 2017 report on the public companies which fall under the authority of the Ministry. June 25. ANAF published the June 18 – 22 legislative updates. ARRIVED   ANAF put up for debate the Draft Order on social and health contributions, Draft order on sponsorship forms, and the Draft order on income tax for individuals. FinMin put up for debate the Resolution on State Aid and the Draft Bills on the execution of the general budget & social insurance budget for 2017 (June 27); Draft Resolution on Centralized Procurement (June 26). DEPARTURES ANAF Order No. 1612/2018 approving the List of fiscal obligations paid in the single account was published in the Official Gazette. Draft bill on corporate governance was adopted by the Senate. The Chamber of Deputies is the decision making body Draft bill on the 2040 Strategy was adopted by the Senate. The Chamber of Deputies is the decision making body.


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Fiscal Policies Review - June 18 - 25, 2018
            Following Central Bank’s Macroprudential Committee’s proposal for capping the degree of indebtedness, FinMin opposed the measure and asks for impact studies behind this type of decision. While the FinMin asks for a relaxation of lending conditions, the Central Bank had talks with the banks over capping the indebtedness level, similar to the model Romania had before joining the EU in 2007. Pundit Lucian Isar noted that BNR Governor Mugur Isărescu "is breaking down the economy as he did in 2008" in reference with ongoing rumors about capping the level of indebtedness.  FinMin Teodorovici concluded on June 17 that "BNR does not plan to limit lending". A slightly different approach was presented by BNR’s Adrian Vasilescu on June 25. According to him, the Central Bank does not plan to “cap lending” but to avoid “over-indebtedness.”              A press release issued by the European Commission on June 22, calls on Romania to correct significant budgetary deviations. The EC recommends that Romania take measures to ensure that the nominal growth of net primary government expenditure does not exceed 3.3% in 2018 and 5.1% in 2019, representing an annual structural adjustment of 0.8% of GDP in both years. Deadline set for report on action taken is October 15, 2018.


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Fiscal Policies Review June 11 - 18, 2018
Following mixed messages regarding the privately administered pensions, on June 13, President Klaus Iohannis argued that a pension system largely administered by the state in a country with a low birthrate in not sustainable. “Any attempt to continue the administration of pensions under the current circumstances is nothing but illusion and sacrifice of future pensioners’ wellbeing”, Iohannis highlighted.             On June 13, PM Viorica Dăncilă stated that the recent data published by the INS is proof that the measures taken by the Government, and the ones they will continue to take, brought more money into Romanians’ pockets. The Prime Minister added that the numbers prove that alarming messages from various critics have no fundament for their claims.             On June 15, PNL Senator Florin Cîțu argued on Facebook that there are certain contradictions between the data published by the Ministry of Finances and the data released by the European Commission regarding the 2017 structural deficit. According to Senator Cîțu, Romanian authorities claim that the deficit was kept within the established threshold, at 2.9%, while the EC puts it at 3.3%. Cîțu added that he will address an official inquiry to the Ministry of Finances to clear the issue.             Central Bank proposes capping the degree of indebtedness. FinMin opposes the measure and asks for impact study.


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