ECONOMY FINANCE&BANKING POLITICS

10 billion budget gap scandal: Liviu Dragnea asks for a parliamentary commission for Ciolos and Dragu, former PM accuses PSD leader of false propaganda

The chairman of the Social Democrat Party (PSD), Liviu Dragnea, has stated, on Sunday, that he will consult with the Social-Democrats to decide the possible initiation of a parliament inquiry commission, given that the 2017 budget has a gap worth around 10 to 14 billion lei.

He said that he takes into account the possibility of initiating an inquiry commission to check the decision at the Finance Ministry since the last budget revision.

“It’s very possible that tomorrow, I will consult with my colleagues, we initiate an inquiry commission, because what happened at the Finance Ministry is illegal. They estimated, on paper, probably having as basis some commitments written by some stakeholders, that incomes in Romania at the end of the year 2016 will grow by about 3 million. Reason for which they made a positive revision. This was somewhere around November 23. December 31 shows us that incomes are smaller by 10 or 14 billion, I will get all the facts in the morning [e.n. – Monday]. This is totally illegal. Who lied about that data, which hasn’t happened in Romania before, must pay,” Dragnea said at private broadcaster Romania TV.

The leader of the Social Democrats considers that those who must explain are the Prime Minister, the Minister of Finance, the Minister of European Funds, the head of the National Agency for Tax Administration (ANAF) and the chairman of the Fiscal Council.

“We are speaking of at least five people who should give explanations: Prime Minister, the Minister of Finance, the Minister of European Funds, the head of the ANAF and the chairman of the Fiscal Council. (…) Let’s see how Mr. Chairman of the Fiscal Council issued preapproval, in fact how he certified the data was real. We are in the situation in which Romania’s budget on 2017 has a 10 billion lei gap, that we will surely be covering, but these 10 billion lei could’ve gone to other better things for Romanians,” Dragnea also said.

“We are in a situation where Romania’s budget for 2017 has a gap of 10 billion lei, which we’ll cover, but these money could have been directed to other good things we could have done” Dragnea stated.

Chairman of the Fiscal Council Ionut Dumitru stated for MEDIAFAX that the actions announced by the Government on Friday will lead to an increase of the budget deficit above 4% of GDP. Romania must fall within a budget deficit target of no more than 3% of GDP, otherwise it risks to be sanctioned by the European Commission for excessive budget deficit.

 

Dacian Ciolos reacts to the announcement made by PSD President: The gap in the budget does NOT exist. Dragnea doesn’t know how to financially manage the promises in the campaign

 

Former Prime Minister Dacian Ciolos replied to leader of the Social-Democrats, Liviu Dragnea, that the country’s budget “is not a bottomless pit” and “cannot be administered to the likeness of Robin Hood”, claiming that the Social Democratic Party (PSD) is covering for its “failures and false promises with diversions and propaganda.”

“Confronted probably with a few figures and realities of Romanian economy that I have been saying for months, aware that he doesn’t know how to get out of trouble in order to cover financially the promises made during the electoral campaign, Mr Liviu Dragnea pulls a trick and announces that he supposedly had found, I quote, ‘a ten-billion gap in the budget’. For any person with the least economic knowledge, such a ‘gap’ would have meant either lower income or higher spending than foreseen and anyway it should have appeared in the budgetary deficit – which is not the case. This “hole” does NOT exist,” Ciolos stated.

He added that in 2016, revenues were bigger than in 2015, and the final deficit was below the one foreseen.

“As a matter of fact, in 2016, revenues were bigger than in 2015 and the final deficit was below the one foreseen and approved by the Government at the same time with last year’s budget. Moreover, in December we completely reimbursed companies 2.1 billion worth VAT, without leaving any pressure on next year’s budget, as used to, precisely to ease the burden of the future Government. The rest are tales. Actually, in 2017 there is another budget. In case this year Mr Dragnea cannot pay his electoral promises, he cannot blame last year’s budget. But, Mr Dragnea doesn’t pay attention to details, does he? For the rest, it is the same modus operandi used by PSD while we governed: it’s the technocrats’ fault. PSD covers up for its failures and false promises with diversions and propaganda,” stated Ciolos.

“The country’s budget is not a bottomless pit and cannot be administered to the likeness of Robin Hood, Mr Liviu Dragnea. Your populist promises will be applied on the backs of those who work honestly and pay taxes, you will indebt our country and future. Even so, why didn’t you say during the campaign that you will increase taxes for part of the employees and you did that in the second session of the Government?,” wrote Ciolos, on Monday, on his Facebook page.

 

USR’s Ghinea, former Minister of European Funds in the Ciolos Government: “Dorel came to power”

 

Former ministers of the Ciolos Government have also reacted to Liviu Dragnea’s statements related to the fact that the 2017 budget “has a gap of ten billion lei, which of course we’ll cover”.

“Dorel came to power. Dorel is calculating how much does it costs everything that he promised in the campaign. The result is with decimals. Dorel gets angry and blows up something about technocrats, inquiry commissions and extraordinary session. Woooe, we’re shaking. Hey, Dorel, is there any problem?!” reacted the former Minister of European Funds in the Ciolos Government, the Deputy of Save Romania Union (USR), Cristian Ghinea, on his Facebook page.

 

Vlad Voiculescu: PSD knew that they don’t have money for the promises they made in the campaign, and now they blame Ciolos

 

In his turn, the former Health minister Vlad Voiculescu stated that PSD knew that they don’t have money for the promises they made in the campaign and now they blame Dacian Ciolos.

“1. In the campaign, PSD promises salaries, pensions, aircrafts.

  1. Ciolos tells them that there is no money for this and that we have to be responsible. Pislaru is even more plastic: “a Nobel for who’s makin’ the budget!”
  2. PSD wins elections and figures out there is no money for salaries, pensions, aircrafts. So they blame Ciolos.

Makes sense, right?

Some of the howlers until now:

January 5, 2017, Liviu Dragnea: “Health Ministry wanted to close 100 hospitals”

January 8, 2017, Liviu Dragnea: ‘We found a 10 billion lei gap in the budget’”, Vlad Voiculescu wrote on Facebook.

 

Ionel Danca: With PSD and Mr. Dragnea, we’re like in a bad joke

 

Ionel Danca, State counselor of the PM Dacian Ciolos’s Office, reacted the similarly, saying that “with PSD and Mr. Dragnea, we’re like in a bad joke”. He says in ironic tones that he supports a parliamentary inquiry commission, to see “how much economy PSD and Mr. Dragnea know”.

“I see a big anxiety in PSD because they have found a 10 billion lei gap in the management. Mr. Dragnea, who had a rare political performance of promising higher salaries and lower taxes, has also found the convenient explanation for the failure: the disaster left by technocrats. Mr. Dragnea is honestly mistaking the budget deficit, which has increased by 2% of GDP in the last month (as it happens every year) – but which remained below 3% in an electoral year with numerous populist pressures – with unperformed expenditures according to the budget forecast made by (guess who) PSD in 2015 for 2016! So, we’re in a bad joke with PSD and Mr. Dragnea: there is no deficit, which has been maintained within normal limits, or any lack of income, but unrealized expenses according to their budget forecast of 2015. However, we should do a parliamentary inquiry commission, to see how much economy PSD and Mr. Dragnea know :)”, Danca wrote on Facebook.

 

Former Finance Minister replies to Dragnea: ‘Budget is not a chest in a corner of the office’

 

“Budget deficit is 2.59% of GDP, compared to the target of 2.8% from the beginning of the year. This means we don’t have a 10 billion lei gap. If the gap would have existed, it would have been translated into an additional deficit of approx. 1.3% of GDP, and therefore we should have end the year with 4.1% of GDP. Moreover, we shouldn’t forget that Romania’s budget are checked and monitored by the European Commission. And Romania’s budget in particular, since we are a state in the post-program supervision period until around 2018” stated for Hotnes.ro the former Finance Minister Anca Dragu.

“Budget is not a chest with money which the minister keeps I a corner of the office,  and which he possibly takes with him when he leaves”, also said the former head of Finances.

“Our execution indicates, indeed, a non-performance of expenditures related to the revenue. It actually shows a similar reduction of revenues and expenses compared to the forecast made. For instance, we have unperformed expenditures related to the Health Insurance House. You know that we have the cost-volume-outcome formula on medicines. When the State pays, the drug company also pays the clawback fee. If the State’s expense is not performed on these drugs, the clawback is not charged, too. But I cannot cut these amounts from the budget, because the House can make the settlements in the last day. We also have the projects financed from grants. These projections remain in the budget until the end of the year, and I can’t cut this forecast from the budget, because it would mean that I am also cutting the co-financing”, Dragu also stated.

“Budget is a forecast for the revenue and expenditures, as well as their performance. At the end, you draw the line and see if you have a deficit or a surplus. If the year ends with a deficit, public debt increases, and if there’s a surplus, public debt decreases. Then, in the next year, you start from zero. Budget is an annual construction. When a tax year ends, budget reaches zero, and next year it starts with zero, too”, Anca Dragu explains.

“Besides, what we see in the budget is a support granted to the current Government, given by the fact that in December, we reimbursed a doubled VAT compared to the average – approx. 2.1 billion. This is exactly because we saw that the budget is under the forecast. I continue to believe that there’s a confusion here, and it seems strange to me that these discussions are released in public. Probably, they wish to justify a possible reduction with 10 billion lei of the future expenditures”, the former Finance Minister concludes.

Let’s suppose that Mr. Ionescu budgets for this year the purchase of a car in value of 10,000 Euros. To buy it, Mr. Ionescu uses 6,000 Euros coming from his salary income and the reimbursement of a 4,000 Euros debt, made by his neighbor Popescu. But Popescu announces him that he will not reimburse the debt this year, and, furthermore, Ionescu’s boss reduces his salary to 5,000 Euros per year. Having these money, Ionescu gives up the 10,000 Euros car and he buys a 1,000 Euros motorcycle. Therefore, if at the beginning of the year Ionescu relied on 10,000 Euros income (salaries plus reimbursed debt), he finally had a 5,000 Euros income. Did somebody steal 5,000 Euros from him? No way! The same thing is with the expenditures. They decreased from 10,000 to 1,000. This is about the budget, somehow…” the former Finance Minister also added.

 

Former FinMin: In 2016 we had 1.5 billion lei savings in budget; Romania’s budget is monitored by EC

 

Former Public Finance Minister Anca Dragu maintains that in 2016 there were registered approximately 1.5 billion lei savings in the budget, taking into account that, according to the current estimates, the year ends with a 2.59 percent budget deficit, under the initial 2.8 percent of the GDP initial target.

“Not only that we haven’t exceeded the 2.8 percent of the GDP budget deficit target, but we have even had savings, taking into account that we have a deficit estimate at the year-end of 2.59 percent of the GDP. In cash, it means savings worth approximately 1.5 billion lei,” Anca Dragu told AGERPRES on Monday.

She thus denies the statements made by Social Democratic Party (PSD) leader Liviu Dragnea who has recently said that the budget revenues for 2016 are “10 or 14 billion lei” lower than those estimated “on paper” by the former leadership of the Finance Ministry.

Moreover, the former minister noted that the statements don’t come from the Finance Ministry.

“I haven’t seen a position of the Finance Minister on this topic. They should be, in this period, very busy drawing up the budget for 2017,” Dragu underscored.

Moreover, she explained that the budget functioning mechanism, namely that it is an annual instrument, and if in 2016 there had been additional expenditures these should have been reflected in the deficit of the same year, not transferred to the budget for next year.

At the same time, the former minister mentioned that Romania’s budget is monitored by the European Commission, which would have sent warnings in case there was the risk of exceeding the deficit target.

“Romania’s budget, same as of any EU member, is monitored by the European Commission. All estimates of the EC, ever since mid-year, have shown possible savings in the budget, taking into account the budget execution, in the sense that the deficit will be under 2.8 percent of the GDP in 2016. Therefore, uncovered expenses have not been indicated,” Anca Dragu added.

Referring to the estimations of the new Finance Minister concerning the economic growth over the next four years, of a 5.5 percent average per year, Anca Dragu said that the budget draft she sent to the new Government provides a 4.3 percent economic growth in 2017.

“In the budget draft, we went on a 4.3 percent growth for 2017. If, indeed, the pension and salary increases in the governance programme are implemented, these could have an additional contribution of 0.2 – 0.3 percentage points, because the effects from consumption come up. However, the European Commission has a 3.9 percent of the GDP economic growth estimation for 2017. Same does the International Monetary Fund,” she added.

 

Traian Basescu: The “everywhere-being” Dragnea invokes the difficult legacy; actually, PSD members realize that there are not so many budgetary resources to cover the false electoral promises

 

President of People’s Movement Party (PMP) Traian Basescu stated on Monday that “everywhere-being” Dragnea tries to invoke “the difficult legacy” to justify implementing the progressive quota and other fees, stating that “the avalanche” started with high salaries, but companies, real estates, and even “air” will follow.

“With his ‘everywhere-being’ skillfulness, Dragnea discovered neither more nor less than a 10 to 14 billion lei gap in the state budget in December, 2016. And since his ‘everywhere-being’ skillfulness also covers Justice, Dragnea found the responsible persons, too: PM Ciolos, Finance Minister Anca Dragu, the Chairman of the Fiscal Council, the Minister of European Funds, the head of ANAF, and not at last President Iohannis” stated PMP’s President Traian Basescu on Facebook, in a post called “The ‘everywhere-being’ Dragnea or FAREWELL to the flat tax”.

Traian Basescu claims that once PSD took the power, they realize that “there are not so many resources” to implement their government program.

“Actually, once PSD took the power, they realize that there are not so many budgetary resources to cover the false electoral promises. Therefore, there’s no more convincing excuse than ‘the difficult legacy’. And if we interlard ‘the difficult legacy’ with a Parliamentary inquiry Commission, the propaganda recipe is perfect to justify the implementation of new taxes and fees”, says Basescu.

PMP leader says that “the avalanche started with high salaries”, and companies, real estates, even air will follow.

“Let’s be prepared and say farewell to the flat tax. We’re back to the progressive taxation. The avalanche started with high salaries, then companies, real estates, and why not, air will follow. This is what Dragnea ‘forgot’ to tell in the campaign” Basescu concluded.

 

Ponta intervenes in the ‘budget gap’ scandal: Let’s not forget who, how and why brought Government Ciolos to power

 

Former PM Victor Ponta also intervened on Monday in the scandal of the alleged 10 billion gap in the budget. The former PM reminds that he warned about this situation in 2016, and beyond those who would be directly responsible, he indicates President Iohannis as the main responsible.

“Over the whole year of 2016, me and Gelu Diaconu (former head of ANAF) have warned, with concrete numbers and data, that there is an increasingly large gap in the country’s budget! It seems that we were right!

The main causes – the huge betrayal at the European Funds (when Romania didn’t take any more money to remain available for other expenses of the European Commission); beheading the ANAF leadership and bringing persons that were controlled by multinationals; paralyzing all central and local public investments ‘because of the fear of DNA’!

Of course Ciolos, Dragu, Ghinea and others must be responsible! But let’s not forget who, how and why brought this Government to power – KLAUS IOHANNIS!” Ponta wrote on Facebook.

 

 

Related posts

Constitution-dedicated Senate extraordinary session likely

Nine O' Clock

In 2016, PSD raised RON 15 million from contributions

Nine O' Clock

Marian Vanghelie and Horia Georgescu want to become father at large