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Friday, 08 Nov

Prime Minister Ludovic Orban’s meeting with the Governor of the National Bank of Romania Mugur Isarescu

Prime Minister Ludovic Orban met with the Governor of the National Bank of Romania Mugur Isarescu


Ludovic Orban: We conducted an analysis of the economic situation, regarding deficits – trade deficit, budget deficit – an analysis of inflation, and developments in the field of inflation, with all consequences related to interest rates, loans. Obviously, our interest and common objective are to correlate the governmental policies with BNR policies, to ensure macroeconomic balances, and create a solid foundation for economic development. The main result of this discussion is the decision of permanent communication, of coordination of measures at Government level, and as regards the policies implemented by the National Bank, to create this solid development pillar.

 Reporter: The Governor said that he expects you to have a collaboration so that this Government does not have a discretionary fiscal policy. Did he ask for assurances in this respect?

Ludovic Orban: Here, it is not about asking for assurances, and I explained this to you, but about a permanent dialogue, a reciprocal briefing on any kind of intent in the field of tax policies area, budgetary policies, public investment policy. We reached very many aspects related to what has happened, and especially the consequences and we also discussed possible solutions to put right the damage generated.

Reporter: What solutions ..?

Ludovic Orban: From tax solutions to solutions related to...

Reporter: Do you think that wealth confiscation will take place sooner?

Ludovic Orban: /.../. We are talking right away.

Reporter: You mentioned tax statements for politicians, at a certain moment, in addition to statements of interest.

Ludovic Orban: Not only for politicians, but I also referred to the whole, to any citizen. Watching how tax authority is acting in other countries, it seems normal for me to enforce the same thing here. If you have assets that you cannot justify based on your income, you either pay the taxes for the respective assets, or the state recoups its money from the assets you acquired without having the legal revenues corresponding to the taxes you paid.

Reporter: As regards tax solutions, currently, the Governor said that he wants to..

Ludovic Orban: As regards the tax solutions mentioned in the programme for government, the Governor knows about these tax solutions, namely: Ordinance 114, regulations in the field of energy, communications, financial – banking system, regulations affecting the functioning of Pension Pillar II, and other regulations.

Reporter: With respect to wages, the Governor said, after he was asked about a statement of one of the BNR Members, Lucian Croitoru, who said that currently, we can speak about the possibility of freezing salaries...The Governor said that it may be a good idea, but how do you see this idea?

Ludovic Orban: The discussion we had, pertains to keeping the budget deficit within as reasonable limits as possible.

Reporter: You have not answered my question on the possibility to freeze salaries.

Ludovic Orban: I have just answered it.

Reporter: The Governor spoke about adjustments which should be made for the deficit not to explode next year, once with increasing the state employees’ salaries, once with increasing pensions....

Ludovic Orban: We have some simple objectives. First of all, improving tax recouping– it is inadmissible to collect 27 percent and something from GDP in Romania. Look at the other European countries in which the budget, the budget receipts stand at a minimum 31- 32 percent of GDP. We have the largest tax evasion, especially on VAT, that is clear, tax evasion on VAT is obvious for anyone. Improving tax collection is an achievable objective. Control of expenses – from personnel costs to expenses with materials and services. Obviously, we rule out that salary rights be affected, and we discussed very many times about this. We made it very clear: as we reduced the number of Ministries, this process of optimizing the functioning of the administration, of restoring the administrative capacity, of institutional simplification is a process which will surely maintain in the public system those people who are competent, who do their job, who provide quality services to citizens. There will follow probably cuts in the personnel costs. In 2019, over the first nine months, the largest increase in expenses is with the personnel-related costs, which exceed more than 26 -27 percent.

Reporter: Does the reduction of personnel costs mean layoffs or freezing of wages or cuts in wages?

Ludovic Orban: It means restructuring, I told you. It means restructuring the administrative apparatus in line with the vision of how each government institution should function optimally. In fact, I also announced that during the last three years, a lot of employees have entered the institution by the back door – consequently, a joke has appeared: more secretaries of state we dismiss, more repopulated is Teleorman, if you recall this. A lot of people were employed by the back door, passing no employment testing. I repeat that we managed to halt competitions and procedures on Law 115, almost in all public institutions, therefore, the PSD political clients cannot be reinstated in jobs following fake competitions. We clearly want to reduce spending, as any administrative simplification entails curtailed spending, including with the number of Ministers, Secretaries of State, their Cabinets, with all employees in the respective institutions, and surely, we will have some spending curtailment. We will surely be careful about an increase in the absorption of European funds, as defrays of all costs at the EU level are in fact revenues, and better absorption of European funds means higher revenues. Therefore, we have solutions we thought of and we are sure that we can balance the situation.

Reporter: Is it time this year to close the budget? It's a short time, less than two months.

Ludovic Orban: The Minister of Finance, after completing the analysis, next week, probably on Tuesday or Wednesday, will present you the situation in detail. It is true that the picture, just as we anticipated, is a much worse one than the ones who led the previous government, declared.

Reporter: The Governor said he was optimistic. Mugur Isarescu contradicted you; he said that the economy is not on the brink of collapse, but it can be ...

Ludovic Orban: But who said that ?! Did I say the economy is on the brink of collapse? I told you that the situation is much worse /..../. Last year, the budget deficit in the same period was 1.6%, now it reached 2.8%, at 10 months. Look at the data.

Reporter: Do you already have the data for 10 months?

Ludovic Orban: We have estimates. Surely, they will be completed, but they are estimated and so will be the deficit - meaning you have a deficit increase of 1.2. This is a dramatic worsening of the budgetary situation and this shows very clearly that there is a risk for the budget deficit to approach 4%, which would be extremely serious.

Reporter: Will you introduce new taxes or increase the existing ones?

Ludovic Orban: You have all our fiscal policy included in the government program and the fiscal policy obviously does not provide for the introduction of new taxes. I want to make clarification again. At the press conference at the Environment Ministry, that is how fake news appeared, I was asked about the environmental tax and I said: surely, we will analyze, we see the extent to which ...But I said that we will consult with the European Commission, and instead of introducing a tax that is not in line with European legislation, and afterwards oblige Romanians to pay the respective tax, and eventually being compelled to give them the money back, better we give up introducing any tax. My statement was not taken into account. Anyhow, next year, there will be no new tax obviously. I repeat that the Government’s tax policy is stipulated in the programme for government, and I detailed you the tax measures we envisage.

Reporter: What did you discuss with Ambassador Klemm?

Ludovic Orban: I had a meeting with a U.S. delegation by a congressman who is in the Congress Committee on security issues. H.E., Ambassador Hand Klemm attended this meeting too. We discussed collaboration in the areas of defence, security, cybersecurity and other topics related to strengthening the Strategic Partnership with the United States of America.

Reporter: Mr. Orban, you said that you are going to conduct an analysis of the way the latest consuls were appointed before Viorica Dancila left the Victoria Palace.

Ludovic Orban: Surely, Mr. Bogdan Aurescu- who is now very busy, will try to remedy any dysfunction in presidential election preparedness and there are a set of other issues to solve- he will come up with the measures. I already know following analyses that some proposals were put forward but they will be announced publicly by Minister Bogdan Aurescu.

Reporter: Returning to budget, is there the likelihood that if Romania exceeds 3 percent deficit this year, you negotiate with the European Commission?

Ludovic Orban: Is there anybody in Romania who thinks that the deficit will not exceed 3 percent? It will surely do it. Surely, we should not panic. This could be seen at the budget execution, only comparing the three-month, six –month, nine-month execution in 2019 with the budget execution in 2018. Other information was the lending pace, which reflects the need to cover a growing deficit. We will surely discuss at the level of the European Commission, we will present what we found and what we intend to do, to redress the situation.  I hold the belief that our partners at EU level will comprehend the situation and our good intentions.

Reporter: Will they not trigger an infringement procedure, will they, is it possible?

Ludovic Orban: We will see.

Reporter: Is this an objective, to negotiate with...?

Ludovic Orban: You immediately advance things about which we need to speak at the right moment. Surely, a new European Commission will be invested, we have a mutual trust relationship with the European Commission President and a good part of the European Commission, we will cooperate so that Romania enjoys a fair treatment and a better relationship with the new European Commission.

Reporter: You said about a new Cabinet meeting until the elections. Do you take it into account, considering the sudden illness of prefects?

Ludovic Orban: It is not necessary, we solved the problem in Arad and in the other counties, a problem appeared in Teleorman too.

Reporter: How did you resolve it?

Ludovic Orban: Some of them recovered.

Reporter: Where will you vote?

Ludovic Orban: At the polling station where I am assigned, in Dobroesti commune, the school in that commune.

Reporter: Are you still sending specialists in medicine from MAI to Arad, taking into account that they recovered...?

Ludovic Orban: A subprefect recovered. /.../

Reporter: /.../ a deficit of 6.1 percent of GDP in 2021. The Governor said that the situation would not be so bad.

Ludovic Orban: We are in office now, under no way is this an evaluation that we agree with and which does not reflect the real situation.

Reporter: If speaking about the state budget law for next year, can we expect a deficit target below 3 percent?

Ludovic Orban: We cannot present this to public opinion before the completion of the draft state budget law. The deficit in the draft state budget law will be smaller than the deficit for this year.

Reporter: Mr. Orban, I would return to a topic of maximum interest to citizens /.../. The extended confiscation you know is blocked, the Criminal Code was amended so that the confiscation of illicit assets be more difficult, when can we see some concrete steps for that tax declaration that you talked about, to really become ...?

Ludovic Orban: That's what I told you: look for new topics. You have enough topics on government policy. As regards the recovery of damages, there is at present an authority that has been established, which must be operationalized and which should begin to recover the damages that result from conviction rulings. Obviously, any improvement of the legislation in this area will be initiated by our government, only after a very serious analysis, which will be conducted by the Minister of Justice, obviously, together with the Minister of Finance and those from ANAF, who are specialized in debt recovery.

Reporter: As for ANAF, given that the Minister of Finance is here, did you propose any change in the management of ANAF? - you said you evaluate it and you want to increase tax collection.

Ludovic Orban: As soon as we finish, and probably today I will finish the first part of relieving of duty, that is, to relieve secretaries, undersecretaries of state of their duties...

Reporter: How many are there so far?

Ludovic Orban: Their number is to be analyzed. I signed today, I don't know if the decisions to relieve of duties were published in the Official Gazette, there were about 35-40.

Reporter: 35, besides those yesterday?

Reporter: Besides the 40?

Ludovic Orban: I've signed some more.

Reporter: Are there around 80, 100?

Ludovic Orban: I don't know and decisions to relieve of duties are still being prepared. I admit that regarding the Ministry of Internal Affairs that is involved in organizing the elections, I postponed the decision for next week, but the Finance Minister remained with only one secretary of state.

Reporter: And as for the Head of ANAF, how do you do it, how do you handle it? - that you already have to think about collaboration.

Florin Cîţu: We have separate discussions every day, we have a plan for a VAT refund. I will tell you more details next week, but I meet with them every day.

Ludovic Orban: You will have it next week, thank you!

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