Report: 2007-2008, most unfortunate period for Romanian governance

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The allocation of national funds for investment projects implemented by local authorities between 2004 and 2011 peaked in 2008 to RON 5 bn (EUR 1.36 bn), standing for roughly 70 per cent of all national investment, according to an Expert Forum report presented during a press conference, Mediafax notes. The most favoured mayors were the theoretically independent ones, which suggest that discretionary fund allocations were purposefully used to encourage political migration of locally elected officials to the parties in power. UDMR mayors have always received above average funding, the quoted source says. ‘On the average, in 2007-2008, you were three times more likely to receive funds if you were a mayor belonging to one of the ruling parties than if you were one in the opposition. The clientelism peaked with the fast rise of public budgets before the crisis. The conclusion is that in a state with weak institutions and a tradition of clientelism, a massive inflow of public budget money can do more harm than good, function of how fair an efficient the surplus is managed,’ the report notes. Tax expert Gabriel Biris said, in the 2007-2008 period, the Government ‘had flushed a lot of money down the drain’, with allocations designed to increase the number of employees and salaries. During those two years, Romania’s motor fleet surged, especially when it came to state-owned enterprises. In addition, the report also says ‘2007-2008 period was the most unfortunate period for Romanian governance. When the Government had money, it ruined the country, which means that the worst possible situation is where the Government has money,’ Biris said. Local authority – especially rural – dependency on national funding comes from their financial weakness. Three quarters of Romanian rural localities are technically bankrupt, as their own income, including the share they get from the national income tax, is lower than their expenditure with the staff salaries, the annual Expert Forum report further notes.  Less than a quarter of all Romanian rural localities – 650 local authorities – manage to meet all their payroll expenditures from their own resources plus the share of the income tax wired to them on a monthly basis. A quarter of those have double payroll expenditures compared to their income. ‘A reasonable merger of rural local authorities and the creation of more efficient and self-sustainable administrative units would mean a major coup on barons at all levels – county, regional or central – actually, such thing would be much worse for them than any grand reforms,’ the EFOR report concludes. For this assessment performed for the 2004-2011 period, six main tools of transfer from the state budget were selected. ‘These six tools are 100 per cent national and discretionary, the money being allocated by the Government or ministries with privileges over budget annex lists, with no clear justification  or project competition. In not so many words, it is the best ground for measuring pure political clientelism,’ the Expert Forum report says. The document released yesterday includes an indictor of clientelism in the allocation of funds for all eight years analysed, which highlights the bigger chance mayors associated with a ruling party had to receive national funds compared to those in the opposition.