Premier Dacian Ciolos stated before the Chambers of Parliament on Monday that the team he leads does not plan to hike taxes or modify indemnities. And if amendments are brought to the Fiscal Code, their aim would be to simplify it, by introducing a special VAT regimen for small farmers for example.
“Contrary to what was claimed, by the end of this tenure we do not plan to hike any tax, to modify any indemnity. On the contrary, this year we lowered the VAT to 9 percent for agricultural work and agriculture sector inputs. And also in order to come to the support of farmers, especially small farmers, natural persons and authorised persons, we plan to come up with changes in the sense of simplifying the Fiscal Code, by proposing a special VAT regimen for small farmers (…) so that they would not need [to go through] this whole bureaucracy and paperwork on registering the VAT,” Premier Ciolos said.
The Prime Minister also pointed out that Romania’s economic growth is forecast at 4.8 percent in 2016, above the initial forecast of 4.2 percent. “It’s sustainable economic growth, but in order for it to remain sustainable it still needs structural reforms and we need to encourage investments,” Ciolos stated before MPs. He claimed that this is not a reason to “triumphantly present” data but “we have to make sure we are on an upward trend.”
“Even though the 2016 budget was one with limited room for manoeuvre, our goal was to manage it wisely. (…) We are registering good economic growth, but I don’t believe this is a reason to triumphantly present this. More important than the economic growth registered this year is being able to prove that we are on an upward trend,” Ciolos said, according to news.ro.
According to the Premier, economic growth stood at 5.2 percent of GDP in the first half of this year, and the growth estimated for the whole of 2016, taking into account the results of the first quarter and “the external uncertainties,” is 4.8 percent, in contrast to just 4.2 percent in the initial forecast, a forecast on which the budget was built.
In the second quarter, the real GDP grew by 6 percent year-on-year, Ciolos added.
“It’s sustainable economic growth, but for it to remain sustainable it still needs structural reforms and we need to encourage investments,” he pointed out.
Ciolos added that this economic growth is sustainable also because it is based on both consumption and investments. “In contrast to previous years, this is the fruit of the contribution of all sectors of the economy,” he said.
Exacerbating special pensions risks endangering pension system
“Where there are contributory pensions there is also a durable pensions system. An exacerbation of special pensions, which go beyond the contributory system, risks endangering the pensions system,” the Premier said.
He talked about the number of jobs in Romania, which has grown by 152,000 compared to July 2015. The number of private sector jobs has grown by around 140,000, while the number of public sector jobs has grown by 12,000. Most of the new private sector jobs were created in the services sector.
“We see a continuation of the unemployment rate’s downward trend, to 6.3 percent this first half, compared to 6.8 percent in the first half of last year. Despite this overall unemployment drop, the unemployment rate remains high, around 20-21 percent among the young, and this is where we have to focus our attention in the coming years in order to stimulate job creation,” the Premier warned.
Ciolos said that, besides a drop in unemployment, the economic growth registered by Romania has also led to a rise in the salary level, by around 12 percent year-on-year, the differences being visible particularly in the IT sector, the food industry and the textile industry.
In what concerns the social security system, the Premier stated that he intends to rearrange the share from financial benefits to social services, something that would encourage inclusion and would create jobs, in order for the current economic growth to remain sustainable in the long run.
Warning for parties engaged in elections campaign
According to the Head of Government, his team’s priority in the following period will be “transferring the good economic growth toward job creation.” Although the unemployment rate is low, it remains high among the young, and in the absence of job creation the pensions system will not be sustainable.
Special pensions represent another danger, the Premier warned. “Where there are contributory pensions there is also a durable pensions system. An exacerbation of special pensions, which go beyond the contributory system, risks endangering the pensions system,” the Premier said.
Investments on the rise
In the first half of 2016, the total volume of public and private investments grew by 7 percent year-on-year. The state invested 12.8 billion Lei, with funds allocated for infrastructure growing by 22 percent.
In what concerns the taxes collected by ANAF, they allegedly grew by 1.6 billion Lei, despite fiscal relaxation measures. The budget deficit is forecast to stand at 2.8 percent of GDP at the end of 2016.
Dragnea: This is not the real situation
Social Democrat Party (PSD) Presient Liviu Dragnea contradicted the Head of Government, claiming that the situation he presented was not “the real situation of the Romanian economy.”
Liviu Dragnea also pointed out that “Mr. Ciolos did not speak Romanian, he spoke the language of technocrats, one that nobody understands,” and claimed that the Government “hasn’t done anything good in the past year.”
According to the PSD President, the current account deficit has allegedly grown sevenfold compared to the level it had during the Ponta Government, and “zero European grants” were tapped for “zero Romanian companies.”
“I want to present your true figures: zero! Two times zero! Zero European grants and zero Romanian companies that received European grants; on the other hand, 6 foreign companies received grants. With this money you could have opened 25 plants in Romanian counties, but you probably considered we have too many plants in Romania,” Liviu Dragnea stated.
“Mr. Prime Minister, whatever the excuses you invent, this Government has failed, it’s a complete failure and I insist on this because whoever wanted such an experiment has to understand that the Romanians’ living standards are over here today. I know you don’t know what seriousness means. You knew very well about Mr. Biris’s draft at the Finances. You lied and washed your hands, both you and the Labour Minister,” Dragnea said.
“Honestly, I would have expected you to have the courage to present the real situation of the Romanian economy, but you didn’t. You have disappointed me a lot. I believe we can assure Romanians that we will fix any anti-national measure, any cut in funds, any tax hike when we will take over the Government. Unfortunately, today the word technocrat has become a synonym for incompetence. Paraphrasing President Iohannis, incompetence kills too,” the PSD President added.
“PSD left the country with no debt owed to the IMF, with a predictable budget. You know well that we were forced to leave the Government in an undemocratic manner. President Iohannis, your political protector, appointed a Government of the people, “my Government.” We saw what came of it. We voted for you last year because we thought that as a former European Commissioner you would open doors at the European Commission more easily and I would have liked to see you, as a former Agriculture Commissioner, doing something for agriculture. You haven’t done anything. It’s a complete failure,” the PSD President said.
Alina Gorghiu expressed the Liberals’ point of view: PSD does not understand economic growth because its leaders no longer see this growth in their own pockets
“We should recommend a few more years of schooling for those who haven’t understood your speech. It wouldn’t be bad, absolutely not. The only thing I heard PSD leader Liviu Dragnea say was that the PSD Government was very good and efficient, and the Ciolos Government was very, very bad. PSD should have looked in the mirror and asked: Mirror, mirror on the wall, who’s the biggest liar of them all?” Alina Gorghiu stated.
“PSD has used this opportunity to give the start to an embarrassing elections campaign. No, PSD does not want to find out the real state of this nation. Now that we are talking about support for this Government. It was PSD which gave this Government the highest number of votes in Parliament, not PNL. PNL doesn’t have Mr. Dincu in the Government.”
“If PSD cared so much about expressways, it would have bequeathed at least one puny kilometre of expressway to this poor little country, not a deficit of 22! Do you know why PSD does not understand economic growth? Because PSD leaders no longer see this growth in their own pockets!” the PNL Co-President added.
Ciolos: I don’t want to learn the language of demagoguery. Economic growth was not seen in the pocket of the clientele
Premier Ciolos reacted to Liviu Dragnea’s speech, stating that he does not want to learn “the language of demagoguery, of populism,” and that the current economic growth is yet to be seen in Romanians’ pockets but PSD is dissatisfied that it is not seen in the pockets of its political clientele either.
“Mr. Dragnea is telling me he doesn’t understand the Romanian language I speak. I don’t know, probably. I am not speaking nor do I want to learn the Romanian language of demagoguery, of populism, of stating things just for the sake of making a good impression. You’ve asked for figures, I came and brought you the figures. Figures aside, I’ve also told you what we did, without taking the credit for these results, which stem from measures taken not just in the last two years but since 2009-2010 or so. I’ve told you what we have done in order for these figures not to remain just figures. You said this economic growth is not visible in the people’s pockets. Maybe it’s not yet seen in people’s pockets (…) but maybe the problem is that this growth was not seen in the pockets of political clientele either and this probably hurts more and I probably don’t know nor do I want to learn this Romanian language,” Dacian Ciolos stated in reply.
The Premier added that the Romanian language he speaks is direct, clear, in order to call a spade a spade. “You were saying that the technocrat Government hasn’t communicated sufficiently. It probably hasn’t, but I preferred us doing things instead of talking too much, and I hope the results would be seen,” the Prime Minister added.