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June 26, 2022

Media: WB makes tough remarks on Romania’s economic situation

The recommendations will be included in 2011 agreement with IMF and EC.

In its latest report, the World Bank dismisses Romania as a country with an off-the-cuff, politically-minded budget and a finance ministry staff more numerous than that of its counterparts in the UK, Germany and France respectively, according to a document leaked to “Gandul” daily newspaper and aimed at the board of the institution and officials in Bucharest. Romania’s revenues and spending budget is deemed unrealistic, lacking credibility and with the lowest absorption rate of European funds EU-wide, local tax authorities that lead to rising collection costs, who should be replaced by an effective IT system and a call-centre, reads the WB appraisal of public finance institutions including the Economy Ministry and the National Agency for Fiscal Administration (ANAF). Further more, the WB holds that, in the medium run, state companies should be controlled by the Finance Ministry-subordinated agency or department.

Some of the WB recommendations will most likely be included in the next funding or oversight agreement Romania announced that it would sign with the International Monetary Fund (IMF), the European Commission (EC) and the WB in 2011. “The way it was drawn up, the current budget is significantly different from the original draft,” the WB report says, given its focus on fixed expenditures, without making costs into a priority. As to the low absorption of EU funds, Romania not going to step up absorption under the n + 3 rule, where n is the number of years available to spend allocated money, will result in its suffering negative consequences in 2011. In late 2009, Romania only made 19 per cent of the payments to projects contracted, compared to an average of 30 percent elsewhere in the EU. WB experts say this finding suggests project implementation needs improving.

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