Press briefing by Prime Minister Florin Cîțu, Justice Minister Stelian Ion and Minister for Development, Public Works and Administration Attila Cseke at the end of the Cabinet meeting

30 December

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Florin Cîţu: Good afternoon! Several legislative documents have been approved on today’s Cabinet, I will present some of them to you. My colleagues will present other legislative documents, but before tackling what we approved on today’s Cabinet meeting, I would like to speak about two important topics.

First of all, Brexit( TN -transition period) ends on December 31, which means that starting January 1, 2021, the United Kingdom will have a third state status in relation to EU states, including Romania. There are a few things I want to tell you. Of course, we will communicate officially, but we should know: customs controls for all goods moving to and from the United Kingdom, so all European carriers and economic operators, including Romanians, operating in relation to the United Kingdom, will have to to know and comply with these new regulations. And again, for short-term travels to the United Kingdom for less than six months in a year, for tourism purposes, European citizens, including Romanians, can travel without a visa, which is very important. So, for short trips, under six months, maybe up to a year, for tourism purposes, European citizens, including Romanian citizens, can travel without visa.

In order to be able to work and study in the United Kingdom from January 1, 2021, European citizens, including Romanian ones, will need a visa. If you want more information, it can be found on the Government's website, on the brexit.gov.ro platform. The ministries most affected by the impact of Brexit have already taken active steps to inform the public, in the next period, we will deal with this. But we must know that from January 1, 2021, the United Kingdom becomes a third state in its relation with the EU states and we should get informed before travelling or conducting trade relations with the United Kingdom.

Another piece of information: as you know, last evening, the authorities in Zagreb activated the European Civil Protection Mechanism, on December 29, 2020, following the earthquake with a magnitude of 6.2 on the Richter scale, which hit the area of Petrinja and which was already felt in nearby areas. At least seven people have lost their lives in this disaster and more than 500 people were left homeless in mid -winter. In this context, the Romanian Government expresses its solidarity with the citizens of Croatia and sends through the Department for Emergency Situations and the National Administration of State Reserves and Special Issues, humanitarian aid amounting to approximately 640,600 lei, consisting of container houses - 14, tents - 50, beds - 100, mattresses - 100, sleeping bags - 200 pieces. It should be mentioned that the intervention of the national search-and-rescue team, ready to intervene, was no longer needed under present circumstances. These were the two things I wanted to say before talking about some normative acts or some decisions passed today in the Cabinet meeting. I will present two. First of all, I will talk about the ordinance initiated by the Ministry of Finance, which contains several regulations.

I would say that this ordinance represents a budget saving of almost 17.6 billion lei for 2021. In the first article: the salaries and bonuses of the central and local public administration staff are maintained, including the personnel holding positions of public dignity, will be maintained at the level of December 2020. This means a budgetary impact of almost 12 billion lei, and in this respect, there are several things which we have considered.

First of all, I said that the decision is based on what I saw happening with the Law on unitary pay in the last three years, a law that was poorly applied, a law that created discrepancies, although it promised to solve the public system inequities, a law that has been followed by many exceptions. In order to be able to correct these things, we need to take a break and by this ordinance, we take a break and, of course, in the next period, we will come up with clarifications. At the same time, we need to know - and we have said this all year - that Romania, along with the global economy, is going through a difficult period. In 2020, as I said at the beginning, we did not touch the revenues of anyone in the public sector and we adopted measures to support the private sector. Even now - and again it must be very clear - we do not come with any cuts, nothing happens with the revenues in the budget sector, they remain at the level of December 2020, after a 25% increase last year and other increases in several sectors. So, this year, in order to correct these inequities and maintain a budget deficit of 7 percent, we have to make this decision. Other similar measures follow, I would like to mention some of them, of this ordinance, , which is a very large ordinance, I mention the granting of holiday vouchers in 2021, in the amount of 1,450 lei. I told you from the first moment that for us the HoReCa sector is an important sector. In 2020 there were SMEs Invest, furlough, the payment of 41.5% of the salary for employees returning from furlough, the exemption from the specific tax, which we have decided to extend today until March 2021. All these helped the HoReCa sector. We continue to support the HoReCa sector also in 2021 through the holiday vouchers for the staff paid from public funds.

And there are, of course, measures that I want to mention, intended for the private sector, but another important thing, the fine point remains at the value of 145 lei, it does not change. Exemption from VAT with the right to deduct supplies of medical devices for in - vitro diagnostic of COVID-19, vaccines against COVID-19, and related vaccination and testing services, other than those exempt from VAT, under Article 292 of the Tax Code, carried out until December 31, 2022.

Therefore, we include other incentives as well for the VAT exemption. Moreover, we eliminate from the category of goods benefitting the exemption from the VAT payment in customs, the waste provided in art. 331 of the Tax Code, in order to avoid blockages in the import of these goods, given that there is no tariff codification, in the combined nomenclature, according to the technical characteristics of these categories of goods.

Furthermore, the extension by 3 months, until March 31, 2021, of the suspension of the application of the sanction provided by Ordinance no. 28/1999 for the non-fulfillment by the economic operators of the obligation to ensure the remote connection of the fiscal electronic cash registers, in view of the transmission of fiscal data to the National Agency for Fiscal Administration. Here, you know that it is a process that we started last year, of connecting the cash registers to the Fiscal Administration. Next, on both sides, it took more time for both economic operators and ANAF, but the procedure has begun, there are cash registers connected and they will be completed, I say that, by March 31, but I said let's leave more time. Continued measures for canceling the interest rates, penalties and all accessories regulated by Ordinance no. 69/2020, so that the application can be submitted until March 31, 2021. These measures expired on December 25, 2020, are extended until March 31, 2021. Continued measure to grant simplified rescheduling, regulated by Ordinance no. 181/2020, so that the application can be submitted until 31 March 2021.

Extension of the budgetary obligations that may enter into restructuring, so that they can be the subject of the restructuring of the budgetary obligations outstanding on December 31, 2020 and not on July 31, 2020. These are measures for the private sector, most of them expired in 2020, in December, and they were extended. Continuation of the measure to settle the VAT refund requests with the subsequent control. You know very well, they expired in January, they are extended until March 31, 2021. Here, this measure was received with great skepticism in the public space. We were told that if we take this measure, tax evasion will increase, for all sorts of reasons. On the contrary, it was one of the best measures we took, it facilitated the refund of VAT faster, companies had this money, they were able to pay other taxes as well, and so we managed in 2020 to we have higher budget revenues than in 2019, although it was a year of crisis.

And there are several things in this ordinance. You will see them all. I repeat, the impact is 17.6 billion lei, positive impact for the budget. Another ordinance that we approved today and that was worked on in record time is an ordinance that many Romanians have been waiting for. It is about the amendment of Ordinance no. 37 on the granting of incentives for loans granted by credit institutions and non-bank financial institutions to certain categories of debtors. It is about extending the payment of installments to banks. The European Banking Authority has made it very clear that they can only be extended for nine months. Now we can tell you that the maximum is nine months. If you have postponed the bank rate for nine months, you cannot extend it any longer, but the others (who have benefited from this measure for a period of less than nine months) can go up to nine months with delayed bank rate. The good part is that people who have not benefited from this incentive so far, can apply for it.

The good part is that people who have not benefited from this facility so far can apply for this measure. Requests for suspension of payment of obligations can be submitted to the creditor until March 15, 2021, who will perform the analysis and issue the decision by March 31 at the latest. The conditions remain about the same, the debtors must declare on their own responsibility the decrease of income/receipts by at least 25% from the last three months prior to the request for suspension of payment obligations by reference to the similar period of 2019/2020.

The conditions are the same, almost nothing changes, only we extend the period and those who have opted for less than nine months can now go up to nine months. These are the two ordinances I wanted to present to you, and this ordinance guarantees that in 2021 we will have the economic growth we estimate. At the same time, it is an ordinance that guarantees that we can put the economy back on its feet, for short term - 2021-2024, and then build for the future. We needed this ordinance now, we needed this respite, so that we could build from here onwards. The budget will be presented in Parliament, toward the end of January. The ministries, the newly created ministries, are already informed about the budget limits by the Ministry of Public Finance, and we will start the budget discussions with the ministers as of next week, in order to be ready by early February. If there are questions

Reporter: What will happen with the minimum salary and child benefits as of January1?

Florin Cîţu: The minimum salary was today in first reading, you know it very well, it is a decision to raise it to 2,300 lei and this will be the value of the minimum salary.

Reporter: Since when?

Florin Cîţu: Since January 1.

Reporter: And it was not adopted today. How will it produce effects?

Florin Cîţu: It was not adopted. We were reassured that it would be all right to pass it next week. So, it is clear, from this point of view, the decision was made to increase it to 2,300 lei.

Reporter: And what about the allowances? How much will they be increased?

Florin Cîţu: As for child benefits, you know very well that this ordinance does nothing in terms of child benefits. It exists in Parliament, it was an ordinance passed by the previous government. There was a law to reject the ordinance in Parliament. This rejection law was resubmitted by the President of Romania to the Parliament for re-examination. From what I understand, today, in the Senate, the law was approved or voted, I don't know if it was approved, the law approving the ordinance was voted, with changes to the respective amendment, with an increase of benefits by 20% in 2021. That's what I knew. I don't know if this form was passed in the Senate or not, but it is the form that voted for, but I do not know what the final vote was.

Reporter: I would like you to elaborate on this topic related to child benefits. In the end, a 40% increase in child benefits was promised this year. Basically, why do we only get a 20 percent increase?

Florin Cîţu: This is how many have been promised in the past. Remember that PSD also promised to double, triple the amount. Right now, on the budget construction, we are considering in 2021, a 20% increase in child benefits is what I think is sustainable, but, I repeat, it is not the government's decision. I have seen - and I tell you, now I am voting as a senator, I am telling you that is what I voted for, the Government has not made any decision regarding it. I left it up to Parliament. This change was made in Parliament. If it is passed until we have the budget, it can be taken into account. If not, we will follow the legislation in force that stipulates those increases. Therefore, the Government has not made any decision regarding the child benefits. We are talking about what is happening in the Romanian Parliament, but today, the Government is following the legislation in force, which shows a 40% increase in child benefits in 2021.

Reporter: Regarding the ordinance that caps the wages, I would like to ask you if there is the opinion from the Economic and Social Council, the opinion from the ministries, because we have been informed that there would not be certain opinions and then the ordinance cannot be published in the Official Gazette. Other effects occur. Tell us what the situation really is?

Florin Cîţu: It was approved with all the opinions, otherwise it cannot be approved and of course it cannot be published without opinions, therefore, we will see. I say it will be published this evening.

Reporter: Given that you are proposing a 7% budget deficit for next year - and you were talking about the savings made through this ordinance - how much does the government allow itself to grant as an increase in pensions next year and when is this increase be granted?

Florin Cîțu: I repeat, the budget will be built with the legislation in force. You know very well what the legislation is, it will be an increase in pensions exactly according to the legislation in force. At this time I have not changed anything, this ordinance has no reference to pensions. Therefore, we will talk about what is happening with pensions on the debate of the budget, but we have no other changes at the moment.

Reporter: There are some calculations made for next year and one of the most awaited topics is increase in pensions.

Florin Cîțu: I can talk about what I have done so far and about the decisions I have made today. We will talk about what will happen when it happens. I can't speculate right now.

Reporter: I would like to ask you more clearly, is there any likelihood for the 8 percent to be changed in terms of pension increases from September 1 or maybe earlier?

Florin Cîțu: I cannot give you the answer now, I am telling you like each time that the budget is built on the current legislation. There is no other way. If the legislation says that the pension must increase with a certain percent, it happens so, they will be budgeted. But currently, we follow the legislation in force. If there are changes, as we did with this ordinance that complied with all the rules of transparency, we presented it two days ago, and before being introduced in today’s Cabinet meeting debate, we put it in decisional transparency. So if we make another decision, rest assured that we will come and present it before adopting it in the Cabinet meeting. It's something we're going to change. From now on, all our ordinances will be presented in transparency because we have nothing to hide and you should know beforehand what is happening.

Reporter: I asked you about that 8 percent as you mentioned it and in fact you gave assurances that you will comply with that percent.

Florin Cîțu: We will see when we make the legislation.

Reporter: You stated a bit earlier that the increase in child benefits is up to MPs, but recently, that emergency ordinance was amended and an amendment that was also endorsed by your PNL colleagues provides that in 2021 there is only one increase, 20% early in the year, not the second one on 1 July. I would like to ask you: from the Government's point of view, would the state budget afford this year the second increase of 20 percent in July 2021?

Florin Cîțu: Last year, you know very well that we had more than 9 percent budget deficit. This year, we aim for a budget deficit of 7%. Last year, we had great trouble convincing the financial markets, and the European Commission, and everyone that we can finance ourselves with that deficit, but at the same time, we should be honest and tell Romanians that we cannot increase pensions by 40% and we chose another percentage, that we cannot double the benefits. And this year we will find the best formula. There will be increases in both benefits and pensions. It will be the best formula for the whole economy, not just for certain categories in society. We have to think that if we don't start showing this fiscal consolidation, I don't think we can have the same, not leniency, but to be able to keep this relationship that we had with the international institutions, with the rating agencies and we nevertheless made some pledges. We have not only the pledges, clearly the solution we see is that only through a fiscal consolidation, can we reach a sustainable economic growth in the future and we will follow this path.

Reporter: Regarding the increases for teachers, it is reported that they would be deferred for December 2022. Did you discuss this option, what happens to them?

Florin Cîţu: I believe that art. 1 refers to all employees in the public sector, central and local administration. All revenues of public sector employees, central and local government, remain at the level of December 2020.

Reporter: So, I wanted a clarification, so the benefits in 2021 will have an increase of 20 percent for which there is money provided in the budget for next year?

Florin Cîţu: Let's be very clear, the budget for next year is not built yet.

Reporter: You've been drawing the budget since....

Florin Cîţu: The budget for next year is being built now. It was built on 16 ministries, we have 18 ministries now. Therefore, there are additional costs, which we must take into account.  When the budget is made we will see what the legislation in force is and then we will have to allocate resources for all those expenses that are provided by the legislation in force.

Reporter: And do you have a backup plan? What will you do, if you have to budget 40% for pensions, 20% for child benefits, where will this money come from, if it is theoretically missing or predicted to be missing?

Florin Cîţu: According to our estimate, the missing deficit is 7 percent of GDP. It can be higher. We have to finance that deficit as usually. We have this constraint with which the whole coalition agreed, a deficit of 7% next year. We will see how we will build the budget, so that we also have increases of benefits and pensions, but also investment money, because I see that this evening, everyone is talking about child benefits and pensions, but no one asks what we will do with the investments. And the investments in 2020 were the ones that kept the economy working and the ones that made the private economy work, they were record investment, they are the ones that guarantee that in 2021 we will have economic growth as well. When we build the budget, we will have all these objectives in mind, we will take them into account and I repeat, investments are a priority, health expenditures are also a priority, there are many things we will take into account, not just increases of child benefits and pensions, but I guarantee that these will also increase in 2021.

Reporter: Good evening. You said that the budget will reach the Parliament at the end of January. Are you considering the assumption of responsibility before Parliament so that the budget can be adopted sooner or do you want it through debate in Parliament?

Florin Cîțu: We are going, through debate, to the Romanian Parliament.

Reporter: But won't the debate take too long?

Florin Cîțu: I have always hoped for the responsibility of the Romanian MPs, especially in these difficult conditions, when you need a budget, we are going through a pandemic, we are going through a vaccination period, and therefore, I hope that the Romanian MPs are responsible. We will see what will happen in the Romanian Parliament, but we will submit the budget to the Parliament. Thanks.

(…)



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