President Basescu, to IMF: I don’t support the duty on fuels


He mentioned, after the meeting with IMF-EC-WB delegation, he would not block the decisions the financial institutions made with Gov’t, but he should not be asked to sign for what they negotiated.

President Traian Basescu received the joint delegation of the International Monetary Fund (IMF), the European Commission (EC) and the World Bank (WB), at the Cotroceni Palace, the meeting taking place without the presence of the press, a Presidency release informs. During this meeting, Presindent Basescu maintained that he was not supporting the introduction of the excise on fuels, mentioning he would not block the decisions these institutions made with Romania’s Government, but he should not be asked to sign for what they negotiated.
‘Certainly, the new fees have been introduced, because of the collecting inefficiency, I do not condemn widening the tax base, I am a supporter of that, but the exaggerations, the additional fees on energy in general and on fuels in particular I find as being a huge mistake, which will affect both the economy and the population. Evidently, these are your and the Government’s responsibilities, but I will not publicly support such a fee, as I do not believe it is a reasonable solution. I am not blocking the decisions between you and the Gov’t at this moment, but do not ask me to sign what you negotiate,’ Basescu said, quoted by Agerpres.
During the talks with the IMF, EC and WB representatives, he underscored that Romania resumed ‘its old habits,’ namely starting to spend increasingly more after having registered a certain economic growth, which would ‘prepare’ Romania for a new crisis. Basescu brought to mind the economic measures implemented in 2010, pointing out that in 2011 they allowed Romania to begin registering economic growth. On the other hand, Traian Basescu voiced his hope that this new IMF mission would be a ‘successful’ one.
The President emphasized the Government and the IMF are responsible for introducing these measures. During discussions with IMF delegates, he recalled the Government’s drastic measures to cut back the budget deficit from 2010, such as cutting back public workers’ wages by 25 percent, introducing new taxes, deregulating the labour market, or reducing the number of jobs in the public sector.
The Government wants the IMF board to approve two assessments of Romania’s preemptive agreement, after President Traian Basescu refused to sign the latest memo, which concluded the assessment carried out late last year by the IMF, because he was opposed to introducing an additional 7 eurocents per liter fuel excise tax.
Prime Minister Ponta was also scheduled to begin discussions with the IMF assessment mission yesterday. He stated Wednesday that the Government was determined to continue with undertaken reforms, while expressing confidence the obstacles raised by President Basescu for “political and electoral reasons” would disappear after the MEP elections. Ponta went on to say the 7 eurocents fuel excise tax would “normally” take effect as of April 1 and not even President Traian Basescu will be able to oppose it, concluding the measure’s effect will be analyzed after the first quarter.
Significant impact on 76 pc of SMEs
The fuel excise tax increase will have a significant impact on 76 per cent of all small and medium-sized Romanian enterprises and 59 per cent of them could even be facing a reduction in business size, Ovidiu Nicolescu, chairman of CNIPMMR (the National Council for Small and Medium-Sized Enterprises of Romania), stated at a press conference. According to Nicolescu, the measure would result in an immediate 3 per cent increase in the product and service prices of Romanian companies.
Request for gas deregulation agenda for companies to be postponed
The IMF delegation also met with CIR (Romanian Investors’ Council) representatives Thursday to discuss taxation and deregulation of natural gas prices. “We talked about VAT, CAS, agriculture, industry, energy, and gas. These are things which they (editor’s note – IMF representatives) know relatively little about. One version is presented in the media and by government officials, while representatives of the three international financial institutions seem to have a different version. No incentive was introduced in the last year and a half to help the economy. The Government should also rely on Romanian investments,” Ioan Niculae, chairman of CIR, stated. He added the “chimerical” 60 per cent tax applied to gas producers as of 2013 was likewise not helpful. In fact, the chairman emphasized, it was a “fiasco” because the state cashed in less money that in 2012. Furthermore, “Romanian consumption went from 17.5 billion cubic meters of gas in 2008/2009 to close to 12 billion cubic meters of gas in 2013, which in turn will lead to production facilities being shut down, jobs disappearing, and important budget revenue sources vanishing,” Nicule concluded.
Investors also requested the price quantum to be re-evaluated, so as to offer the industry and all gas and electricity consumers time to adapt production to the new requirements.

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