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June 28, 2022

PM Boc may resign if next year’s budget targets are not met

2012 draft budget has been passed by Gov’t, will be sent to Parliament.

Premier Emil Boc has said yesterday he will resign if the economic targets set for next year are not met. He however declined to give a definite deadline.

“The resignation is always on the table when those things are not complied with. I assure you of two things: I won’t allow a populist evolution of this budget and everything up to me will be respected, at the expense of my resignation. Every day is a deadline. I repeat, resignation is not the thing to do once every six months. I assume, at the price of my resignation, macroeconomic stability being hold on to. We won’t sacrifice this country for the sake of a Social-Democrat Party (PSD) or a National Liberal Party (PNL) model. Analyses should not be made only every six months, but more often, because this is the only way to make sure you stay within schedule,” Boc said yesterday, on PRO Tv’s “After 20 years” programme.

Asked whether he is inclined to make an analysis three or six months into the next year on the fulfilment stage of those targets and to resign if he finds the goals set have not been achieved, the PM ducked a clear-cut answer.

PM Boc said important corporations are ready to invest hundreds of millions of euros in Romania, in the IT field for example, adding that the issue is still confidential.

Boc’s statements come amid Government’s passage Friday of the draft budget for 2012. Nonetheless, Emil Boc maintained during the programme he would not seek another term in office. Referring to his relationship with the president, Emil Boc defined it as fair, good and efficient, and to the benefit of the nation as well. “Romania would not have resisted through all these years of crisis had not been for the partnership with Romania’s president. (…) Had this country had at Cotroceni a president prone to populist measures, it would have been in economic collapse long ago,” Mediafax quoted Boc as saying.

A belated budget

The 2012 draft budget has been passed by the Executive and will be sent for debate and passage by Parliament. According to law, the draft budget should have been sent to the legislative body by October 15, yet Government awaited the conclusion of autumn negotiations with the International Monetary Fund and the European Commission’s growth prognosis for next year, before passing the budget. The go-ahead has also been delayed by ruling coalition leaders, given several ministers, mostly those with the Democratic Union of Hungarians in Romania (UDMR), were unhappy about the funds allotted, while coalition members, including the Democrat Liberal Party (PDL) voiced their discontent at the scarce funds apportioned to local authorities.

The consolidated general budget for 2012 was built on total revenues of RON 195.3 bln and overall spending matching RON 206.5 bln, which led to a deficit of RON 11.2 bln. Economic growth is put at 1.8 pc to 2.3 pc. If budget revenue estimates are up 0.3 pc from 2011, budgetary spending is down 2.2 pc from this year, and investment funds will decrease by RON 1.3-2 bln next year from 2011, although Govern­ment is hopeful the decline would be offset by EU funds absorption on the up by 50 pc.

Increases, cuts and dissatisfaction

The majority of ministries complain about the 2012 funds not being enough to carry out their activities and to make investments. Mediafax quoted some representatives who attended Government talks Friday as saying that Justice Minister Catalin Predoiu had told PM Boc during the session that the 2012 budget would not allow the hiring of additional personnel required for the implementation of Juridical Codes, and Foreign Minister Teodor Baconschi cautioned the ministry had not been allotted money for emergency situations.

Although the Ministry of Regional Development and Tourism had received RON 3.1 bln, less than the funding stipulated by the original draft budget, it will eventually get RON 3.45 bln, from RON 3.44 bln this year. However, Development Minister Elena Udrea says that, while budget is still not enough for the investments planned, she pins her hopes on a positive budget adjustment next year.

Defence Minister Gabriel Oprea too says the ministry budget only rose by a little from this year’s, yet, he expressed his hope the ministry will still be able to purchase the US-made F-16 aircraft air forces of other NATO states in the area are also equipped with.

The Presidency and the Romanian Intelligence Service (SRI) too have seen changes in their respective 2012 budgets. The Presidential Administration’s 2012 budget was down RON 2.3 M from the original amount allotted, to RON 27.2 M.

The SRI however got more money, RON 989.3 M more exactly, than the RON 986.9 M stipulated in the original draft.

Fiscal council recommendations

The Fiscal Council has recommended that Government set quarterly targets on absorption of EU funds to ministries and other credit releasing authorities, which is of essence for the budgetary construction to offset the negative effects the crisis has on capital flows. The 2012 draft budget stipulates post accession EU funds worth RON 12.5 bln, nearly EUR 3 bln, up 60 pc from 2011.

Also, Government expects to get RON 1 bln worth of EU pre-accession funding. The Fiscal Council also calls on Government to lay out the potential impact on deficit under ESA 95, according to the current stage and that estimated for 2012 of pledges made via the National Infrastructure Development Program handled by the Ministry of Development and that of Environment respectively.

The Ordinance passing the National Infrastructure Development Program stipulates budgetary spending of nearly RON 20 bln, close to 4 pc GDP, for investment projects in the coming years. Under the ordinance provisions, the spending is authorised for the interval 2010-2013 and the actual payment would be made in tranches, and therefore reflects the budgetary execution on cash basis, only starting with 2013.

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