Fresh News

Friday, 24 August 2018

Blocking the adoption of the first budget revision negatively affects the economy and the Romanians’ fundamental rights

The Romanian Government fully understands its responsibilities to ensure a good governance and will take all necessary measures for the full and timely payment of pensions, allowances, child benefit, state sector salaries, to ensure the medical services, and the citizens’ safety, the proper functioning of state institutions, despite the attempts of President Klaus Iohannis to block the adoption of the first budget revision of this year.

The President's refusal to urgently convene the Supreme Council for National Defence (CSAT) to approve the draft budget revision can jeopardize not only the incomes of the most vulnerable categories, namely pensioners, mothers and children, but also the access of the patients to medical services.

Additional funds for pensions and other social rights

Taking into account the amendment of the Pension Law, recently passed by Parliament and promulgated by President Klaus Iohhanis, as well as the increasing number of beneficiaries of child benefit, child- raising allowances and re-entry incentives for back-to-work moms, an addition to the amounts initially allocated to the Ministry of Labor and Social Justice is necessary. More specifically, an additional amount of 1.3 billion lei is needed for the payment of pensions, according to the new legal provisions, and an increase in the budget by 450 million lei is necessary for the payment of other rights due to children and their parents.

Larger resources for healthcare

In the health sector, the failure to allocate additional resources on time, jeopardizes the access to treatment of patients suffering from serious illnesses, the provision of blood supplies, at present -insufficient ,for blood transfusions in health care facilities, as well as referral to treatment abroad for patients for whom treatment cannot be provided in Romania. In the draft budget revision, an additional amount of 65 million lei was earmarked for the treatment of HIV / AIDS patients, 38 million lei for the purchase of reagents, blood collection bags, sanitary materials and food vouchers, 5 million lei for the National Programme of prevention, surveillance and control of tuberculosis and 10 million lei to save the lives of patients who cannot be treated in Romania.

Also, failure to adopt in time the budget revision, implies risks in terms of full and timely payment of salary rights of staff in the medical system, although there are budgetary resources available to provide them.

The delay in approving the revision also puts at risk the provision of free and compensated medicines and treatments for the following months for chronic patients with serious illnesses: oncological diseases, diabetes, people in need of dialysis and those suffering from rare diseases.

Citizen safety

Citizens’ safety and protection need means of intervention, trained and motivated staff and adequate resources. By the budget revision, the Government provided extra money for endowing MAI(Internal Affairs Ministry) structures with intervention means for the maintenance of helicopters that provide air support, especially in SMURD's rescue missions, equipment and fuel.

The budget revision also includes the amounts needed to supplement MAI staff by including both young graduates from their own educational establishments and from external sources, the payment of overtime worked outside the normal working hours for staff with special status  operating in the public safety and order sector, in observance of the state border regime of Romania, in emergency situations, etc. The additional amounts were earmarked through budget revision considering that the legal basis for their payment was adopted by Parliament on  April 1, 2018.

Control and fight against African swine fever

Controlling and fighting the African swine fever on Romanian soil  have prompted urgent and firm intervention measures that require additional funds for the National Sanitary Veterinary and Food Safety Authority. The draft budget revision provides resources for the payment of compensation for slaughtered animals, purchase of disinfectants, mobile incinerators, transport of slaughtered animals etc. The delay in adopting the budget revision affects the proper unfolding of the program designed to control and fight the African swine fever.

Support for agriculture

The financial impact of the delay of the budget revision is estimated at EUR 1.75 billion - 0.8% of GDP and is generated by the delay in ensuring the funding of the agricultural autumn campaign and investment in livestock farming for the poultry sector, the swine breeding sector respectively. Under these conditions, the production costs could increase by 10% precisely during the land preparation period, and the timely payment of the diesel subsidy - 100 million lei is jeopardised.

At the same time, direct payments through the EAGF programme will be compromised because the financing of this sector by 14.65 million lei is postponed.

At ANIF, the lack of funds for repairs to 38 irrigation facilities will have an estimated economic impact of 1 billion euros under the prolonged drought.


European non-reimbursable funds

European non-reimbursable funds are an extremely important resource for Romania's development, which is why the Government has made strong efforts to contract as many projects funded by European money as possible.

By delaying the budget revision, it is delayed the conclusion of financing contracts under the Human Capital Operational Program, amounting to approximately EUR 1,120 million, of which the EU’s contribution is EUR 952 million.

These projects are found in vital areas for Romanians:

Health – nearly 400 million euros;

Education – nearly 320 million euros;

Labor market – nearly 100 million euros;

Child protection – nearly 300 million euros.


Investments in local infrastructure

The National Local Development Program funds local investment objectives with impact on people's everyday life: investments in construction projects of county, countryside roads, streets, water –sewerage system, schools, works to be achieved mainly in the summer. The amount defrayed by the local administration reached 500 million lei and it is necessary to supplement the funds for this program.

The failure to timely approve the state budget revision will lead to delaying the financing of these investments and the failure to timely pay the works carried out, these being estimated at 300 million lei.

Also, the territorial-administrative units have made numerous requests to supplement the balancing amounts allocated from the state budget to ensure the operation costs, and the county councils are encountering difficulties in financing the child protection system and the social assistance centers for people with disabilities.

Investments in transport infrastructure

The attempt to block the adoption of the budget revision also affects key transport projects such as maintenance and repair works on national road lines and highways, capital repair works for railway.

At the same time, it causes delays in defraying travel incentives for public passenger transport operators with impact on the activity of carriers providing services to students, pupils, retired, war veterans and 1989 Revolution participants. Arrears, insolvency, etc. may occur, which can entail pending legal action, leading inevitably to the increase of the amounts due from the state budget.


Backing the business environment

Delay of the budget revision put at risk the programs aimed at supporting Romanian entrepreneurs. The draft revision provides additionally 14 million lei for Romanian companies’ participation in 18  fairs and exhibitions abroad, under the national flag. Over 150 participating companies, potential exporters, are affected.

Also, the program to support the internationalization of Romanian economic operators cannot be launched in August 2018, as it was initially planned. The program consists of subsidizing the participation of Romanian companies in international fairs and exhibitions under their own brand. The initial budget of the program is 10 million euros.

Another effect is the delay in launching the Start-Up Nation 2018 program in the absence of an approved budget.

Furthermore, some of the main credit release authorities, including the Romanian Cultural Institute, the State Secretariat for the Recognition of Merits of Fighters against the Communist Regime Established in Romania during the 1945 – 1989 period , they do not have the full payment of wages ensured for September, given that through the budget revision, a proposal was made so that personnel costs were to be supplemented. As a result of the President’s decision not to convene the CSAT meeting, there is a risk that employees of these public institutions to not benefit on time from the payment of social contributions.

Once again, the Romanian Government publicly requests President Klaus Iohannis, to attach due importance to the draft budget revision for 2018 so as not to bring serious damage to the guarantee of Romanians' rights to healthcare, pension, public safety and the proper functioning of state institutions.


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