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August 7, 2022

PM Ponta: Precautionary agreement with IMF, a sign of stability

Our country needs a new precautionary agreement with the international financial institutions, Prime Minister Victor Ponta said on Tuesday, underscoring that Romania’s big issue was the lack of loaning. According to him, following the document signing, the state would borrow cheaper, at much lower interest rates.
In his presentation in front of the parliament plenum, Victor Ponta stressed several ideas: – salaries have grown to the normal level, the minimum salary has increased to RON 800; – we have exited the excessive deficit procedure; – for the first time since we’ve joined the EU, the state Treasury provided funds to complete the European Funds; – the EU funds absorption has increased three times; – this is the third consecutive agreement with the EC and IMF; – Romania has now the possibility to contract cheaper loans than other countries in the region; – I wish I could say Romania doesn’t need any other agreement with the financial international institutions; – the new accord foresees no obligation on Romania’s part to increase taxation; – the 16 per cent flat tax remains in place, VAT for bread has been reduced; – state guarantees will increase to RON 8 bln in 2014; – right now the main problem for private companies is their access to crediting; – there are no major privatisations to carry out, the listing of Energy Company Oltenia, 1- per cent of Hidroelectrica, the involvement of private capital in energy companies must be stimulated; – the new accord does not include any provision to tax natural authorised persons or copyrights, this is an older request coming from our international partners; – together we can draw up a fiscal system meant to enlarge the taxation basis; – through out commitment we are proposing a transparent way to ensure stability and predictability, needed in order to have economic growth; – We have negotiated a lot, together with the Budget and Finance Ministers, in order to have a clear list of our commitments.
‘In Romania, let me say we are not going through a good period – it is in a way like a patient having come out of surgery and intensive care, who is now in his hospital room beginning to feel better. But we are far from reaching performance and, if you wish, the biggest challenge to Romania and to the Government I lead is that of coming out of this circle. (…) We are in a better period, but it does not necessarily mean that everything is going well and in this context we need to show a type of stability that, as much as we voice it, investors do not believe unless it is certified by international institutions. (…) This way, we borrow much cheaper. (…) Through this agreement, I want the large projects to be funded from the World Bank, from the European Bank for Reconstruction and Development, from the international institutions, and the money of the commercial banks in Romania to be left for the private companies of Romania. It is, if you wish, to me, who I do not run in the elections next year, also an ally against some populism outbreaks,’ Prime Minister Victor Ponta told a video interview granted to Agerpres.
Prime Minister Victor Ponta unveiled yesterday to the joint chambers of Romania’s Parliament the main elements in a new arrangement between the Romanian Government, the European Commission, the International Monetary Fund and the World Bank. Ponta says the final draft of a letter of intent related to the arrangement was sent to the IMF on September 12. ‘I have filed a request to unveil to the joint chambers of Parliament the main elements on the new arrangement with the European Commission, the International Monetary Fund and the World Bank, to present all information: advantages, disadvantages and important things. I know that, at least as far as the European funds are concerned, particularly for transportation, when we have the new arrangement with the European Commission and the IMF we will receive the 10-per-cent top up that means some hundreds of millions of euros,’ Ponta said last week.
The Romanian Government and representatives of the IMF and the European Commission have reached a technical agreement on a new 24-month precautionary stand-by arrangement, according to IMF mission chief Andrea Schaechter. The 4-billion-euro financial assistance is equally contributed by the IMF and the European Commission. The new arrangement is expected to be approved by the IMF Board of Directors this September.
No money for institution functioning as long as tax evasion drains significant amounts
Tax evasion is on the rise, as the collection to the budget is half it should be, Prime Minister Victor Ponta said on Tuesday, adding the Government will never have enough resources as long as tax evasion ‘drains significant amounts’. ‘At this moment Romania, according to all the figures, has budgetary financial stability, that is praised by our international partners, we have economic growth and yet the phenomenon of tax evasion, in particular, is on the rise. The Tax Council was saying in its last report that we have been collecting half we should since 2010, when the VAT (value added tax) was raised. The phenomenon is extremely serious and may be harmful to our development as a society. We will never have money for the functioning of the state institutions, for schools, hospitals, infrastructure as long as tax evasion keeps draining significant amounts of what should go to the state budget,’ Ponta said.
The prime minister made the remarks after the first meeting of the Inter-ministry Strategic Group for the prevention and combat of macro-crime that is taking its toll on the citizen’s safety and the functioning of the public institutions. He voiced hope that budget revenues would increase as a result of combating tax evasion. ‘I think the new structure, the new organisation of ANAF (the National Tax Management Agency), which for the first time has an Anti-Fraud Directorate – the main target of which will be the great tax evasion and great crime, not the control of every company of two or three staff, but exactly the areas where there is great evasion – in collaboration with the intelligence services, the security structures /…/ will enable us, in the period ahead, to have revenues that the national budget direly needs, from combating tax evasion,’ he said.

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