The Week in Review 06-12.01.2013

We bring you an overview of the headline-grabbing events in Romania this past week.

Corina Cristea, 12.01.2013, 17:14

Romania’s Prime Minister Victor Ponta presents the key elements of the budget bill for 2013.

Romania’s Prime Minister Victor Ponta has presented the key elements of the budget bill for 2013. The budget is based on a 1.8% economic growth rate, a budget deficit of 2.15% of the GDP and an exchange rate of 4.5 lei for one euro. According to Ponta, Romania’s GDP this year will amount to around 140 billion euros. State returns will stand at 46 billion euros and spending at 49 billion. Beyond all these figures, the centre-left government in Bucharest will try, according to Ponta, to close a cycle of 4 extremely difficult years, two of which were characterised by severe recession.

An increase in the salaries of public employees and pensions will not be possible this year, explained Ponta. The government also plans to go ahead in 2013 with the reform of the public sector, of salaries and the fiscal and tax collection system. “We have office workers earning five times more than a doctor, a teacher or a police worker”, Ponta emphasised. The final version of the budget bill will undoubtedly be established after next week’s talks in Bucharest between the government and a delegation of the International Monetary Fund. In the last few years, the Fund has had a say in all the major decisions taken by the Romanian authorities.

Taxes and duties may increase in 2013.

The government in Bucharest has issued an ordinance allowing local authorities to decide whether they wish to increase or not taxes and duties by 16%, which is the inflation rate in Romania in the last three years. So far, the adjustment of local taxes and duties has been imposed by the central authorities. Prime minister Victor Ponta has warned the local authorities who choose to keep taxes and duties at the level of 2012 that they will be on their own and will not receive any additional funds from the government.

The National Bank of Romania urges for caution in the use of public money.

While the government is busy drafting the budget, the governor of the National Bank of Romania Mugur Isarescu has urged for caution in using public money in 2013. However, he expects this year’s fiscal policy to be one of consolidation, not austerity:

“In my opinion this year’s fiscal policy will be normal, in the sense that it will no longer be based on adjustments and massive reductions in deficit, like last year, but rather on consolidation. I believe that austerity will not be necessary if we implement adequate financial discipline and we are more cautious in the way we spend public money. This year’s monetary policy will also be normal, in that it will keep up with the inflation rate and will adjust all the available instruments. In the meantime, the agreements with international financial institutions will remain in place and provide the general background.”

The European Commission to resume payments to Romania as part of the SOP HRD

The European Commission may resume its payments to Romania under the Sectoral Operational Programme “Human Resources Development” (SOP HRD) in February at the earliest, EU Commissioner for Employment and Social Affairs Laszlo Andor has announced. The Romanian authorities have made major progress in enhancing the transparency of projects conducted under this programme, although any progress has to be confirmed by the audit delegation at the end of January. Payments under the Human Resources Development programme, the most important programme of structural funds disbursing money to Romania, were put on hold last summer due to serious irregularities reported in the eligibility and implementation of EU-funded projects.

Cold wave hits Romania.

The cold snap and blizzards have hit Romania this week. Most affected were northern and eastern regions, where several national and county roads were shut down and numerous villages were cut off from the power grid. Low temperatures reached minus 30 degrees Celsius in some regions, while glazed frost gave both drivers and pedestrians a hard time.

Praiseworthy students are rewarded in Bucharest.

The League of Romanian Students Abroad has bestowed the Awards for Academic Excellence in the 2011-2012 educational year as part of an awards gala held in Bucharest. The competition, which involved 200 BA, MA and doctoral students, was overseen by a board of judges made up of leading figures of the academic, cultural and editing community. The grand prize and title of “Best Romanian Student Abroad in 2012” went to 30-year-old Sergiu Pasca, a researcher at Stanford University in the USA. This year’s edition of the gala also saw the launch of the SMART Diaspora, a multidimensional strategy aimed at helping young Romanians who have graduated from foreign universities to return to Romania.