President Klaus Iohannis said on Monday that the Social Democratic Party (PSD) “is mortgaging the country’s future” and is incapable of keeping public finances in order.
“After a year and a half of the PSD governance, already, with this highly controversial phase of so-called wage increases, we do not see any roads, motorways, schools, hospitals, anything. On the other hand, people are wondering where this money came from for some raises, and if we look closely, the story is a sad one. The PSD is actually mortgaging the country’s future, it increases wages and pensions, and neglects important investment in infrastructure and investments needed for development in general,” Iohannis said at Cotroceni Presidential Palace.
“From a fiscal-budgetary standpoint, the national budget is under huge pressure. Against the background of total spending rising by more than 22 percent as compared to last year, this pressure should have been mitigated by a consistent, visible effort to increase revenues, to increase the receipts therefore, which did not happen at all. On the contrary, the budget execution shows that the revenues have not reached in any chapter the level in the programme (…) presented by the Government itself. It shows something sad: PSD is incapable of putting public finances in order, and after three prime ministers and the same number of heads of ANAF [the National Agency for Fiscal Administration – ed.n.] the most visible effect is the uncertainty, the lack of predictability, as a whole, a more and more expensive behavior for the Romanian taxpayer,” the head of state said.
“As you know, the PSD proposed to the Romanians, on the one hand, the lowering of taxes and taxes – an action started two years ago with the VAT decrease, on the other hand they proposed a strong increase in budgetary expenditures for wages, for pensions, for motorways they said, for schools they said. For economists or for those interested, this approach has produced surprise. It is a kind of economic magic that was proposed by the PSD. Decreasing taxes, increasing wages and the achievement of all the other things is an equation that can hardly be carried through and we really have to see how long this illusion created by PSD will last,” Iohannis said.
He reiterated that PSD’s wage increases have achieved a “rare counter-performance” in the sense that those who have had their salaries increased are dissatisfied.
“A 25 percent increase in public sector wages was promised, but it remained on paper, because through an accounting maneuver, CAS spending was transferred from the employer to the employee and this increase was thus practically canceled, the head of state added.
“Evolution of public finance totally unsatisfactory, hence PM Dancila’s resignation paramount”
The evolution of the public finances is ‘totally unsatisfactory’ said on Monday night President Klaus Iohannis, in a statement at the Cotroceni Presidential Palace, adding that Prime minister Viorica Dancila stepping down is paramount.
‘The resignation of Mrs. Dancila is imperative so as to make room to some responsible, competent persons, and in this context it is increasingly visible that Dragnea [Deputies Chamber’s Speaker and leader of the main ruling Social Democratic Party, ed. n.] et alii have no solution for a good, efficient ruling,’ said Klaus Iohannis.
The president drew attention that Romania is under the procedure on the significant deviation of the budget deficit.
‘And if not corrected, it will aggravate. Only that there doesn’t seem to be any intention and any corrective measure. I invite the PSD rulers to come to their senses,’ Iohannis asserted.
He said that the PSD governing is not able whatsoever to ‘turn the economic growth into an increase of the incomes.’
The president gave the example of the year 2017 when the Romanian economy recorded an over 7 percent growth and yet the incomes did not grow in proportion with it, on the contrary they were 3 billion lower than the PSD’s own programme. Moreover, he indicated that in the first quarter of 2018 the total revenues are almost 5 percent below the quarterly budgetary programme, meaning they parked below the value estimated by the government.
‘Here fresh bad news keep showing up. The fiscal revenues, they should have increased as the economy grew, but instead, not only haven’t they reached the programmed level and here the 5 percent scheduled quota has been missed, but they are even lower than the revenues of 2017’s first quarter. And here we have a new counter-performance of the PSD: since the moment of the economic crisis, in the past nine years, it is for the first time when the fiscal revenues have dipped against the previous year,’ Iohannis stressed.
He specified that the revenues from the corporation tax have decreased against Q1, 2017, too.
‘This is just as serious as it is a reflection of the fact that the economy is roaring indeed, but only expenditures are roaring at the state budget, while the revenues – timeout,’ said the president.
Klaus Iohannis added that as regards the VAT incomes which, in his opinion, should have been ‘the budget’s main pillar’ the non-achievement against the ruling programme is 9 percent.
He emphasized that the excise incomes probably reflect ‘the most accurately the disarray inside the public finances administered by the PSD.’
‘Although the prices have gone up, although the fuel excise has been re-introduced, which by the way was not forecasted in that valuable ruling programme, and yet the collection by ANAF [the Tax Administration National Agency, ed. n.] has parked at 12 percent below programme. This is the PSD’s performance. Although the Romanians pay higher prices for almost everything, the state is still not collecting the due revenues, it is not building schools, neither motor ways, nor hospitals,’ Iohannis said.
President Iohannis stressed that the European funds are a new ‘failure’ for PSD.
‘As regards revenues, we are 37 percent below the scheduled value. In regard to expenditure, we are at 43 percent below the programmed value. It is way below what has been programmed. It is unacceptable that these European funds are not part of the government’s priorities, but why would we be surprised, the PSD has all sorts of priorities: a quarrel with the central bank, a fight against the investors, the multinationals, it is only the European funds the Gov’t is not fighting against, because if they fought in the interest of the Romanians they would draw the money and carry out investments, at least from there, if they are not capable to do it from own funds,’ the president concluded.
PSD’s Dragnea: Ms. Prime Minister has no reason to resign
The current Prime Minister has no reason to resign and benefits from the support of the Social Democratic Party (PSD), said PSD chairman Liviu Dragnea on Monday, for the private television broadcaster Antena3, as a reaction to president Klaus Iohannis’ statement, in which he reiterated his request that Prime Minister Viorica Dancila resign.
“Ms. Prime Minister Dancila cannot resign just because president Iohannis is bothered by the government programme that produces good effects. As long as the government programme, which produces effects, generates substantial economic growth for Romania, and is put into effect – and it is indeed being implemented – Ms. Prime Minister has no reason to resign. She has the support of the party, it was even discussed today in the National Standing Bureau. We cannot change Prime Ministers each and every time president Iohannis is not satisfied, because, mind you, he/she is not very docile in the relation with Romania’s president,” Dragnea said.
“Despite President’s public attacks, this Gov’t to implement its ruling programme”
Social Democratic Party leader said that the current coalition (PSD-ALDE, Alliance of Liberals and Democrats – ed.n.), will continue the implementation of the government programme despite “public attacks on behalf of President Iohannis.”
He affirmed that the evolution of the economy is positive and consequently, “PSD will not stop here.”
“Despite all the political barriers put up by president Iohannis, despite all the public attacks on behalf of president Iohannis, this Government will implement its ruling programme,” Dragnea said.
He further maintained that president Klaus Iohannis’ statements on Romania’s economic situation are of a political nature.
“I believe this stance had several objectives, politically speaking. The first objective, to try to justify the request for resignation of Mrs. Prime Minister Dancila last week, linking it to some economic data which are false and which are lies, so that the idea that he requested her resignation for the visit to Israel does not gain ground. Moreover, it is very difficult not to understand or to realise that it is a political involvement as the president of Romania, constitutionally, should not have, because he referred, and not for the first time, to a political party, to PSD. Not to mention myself, as I have been the president’s target for two years,” the PSD leader added.
“Last year too we received the same criticism, right from the start of the year, still from Cotroceni [Cotroceni Presidential Palace, the seat of the Presidency – ed.n.], still from Cotroceni’s expertise, that it is impossible from an economic point of view to curb taxes and duties and have economic growth and have higher expenses. It was proven that it is possible and we did not invent this. Bigger countries have done it and were successful, for a very simple reason: the moment taxes and duties are lowered, the taxation basis is increasing that is the number of those producing revenues goes up. So overall revenues rise. Last year too they were saying we wouldn’t have the economic growth that we forecasted, that we would exceed the deficit. It was proven that was not the case. It is very simple and it is not about economic magic. It has to do with very well grounded programme which is well put into place. We can in return talk about the black magic of right-wing governance, including the technocrat governance, when president Iohannis installed the government and we voted for it in Parliament,” Dragnea further said.