ECONOMY FINANCE&BANKING

FinMin Teodorovici: Enough money in coffers for what we pledged to accomplish until year-end

Finance Minister Eugen Teodorovici reiterated on Tuesday that there is enough money in the coffers until the end of the year for both investments and wage and pension expenditures, but that if a particular public spending category can be logically adjusted, this should be done.

Asked about the circular note sent to budget managers, advising them to cut expenses, Teodorovici said that they should proceed to an analysis and if expenses can be reduced, they should act accordingly.

“Until the end of the year we have the necessary money for what we pledged to accomplish, both in terms of investments and expenses related to the Romanians’ incomes, pensions or wages. But I say this again, if a public expense can be adjusted in a logical way, why not do so?,” the Finance Minister said at the end of the meeting at the Victoria Palace of Government with the Mayor of Bucharest and sector mayors.

Teodorovici also mentioned that such an analysis must be carried out at the first budget revision this year for getting to know precisely in what direction the government needs to act, but refused to say whether the revision will be positive or not.

“We’ll see at the time of the revision,” he said.

Asked if there will be layoffs, the FinMin replied that no such thing will happen.

In a different thread, Eugen Teodorovici reiterated that in two years at the most, Romania might no longer run a deficit.

“28 billion lei is not a big amount for a country like Romania, which has many areas where money is being spent without justification. (…) Only that Romania is not in a situation where it needs to focus strictly on narrowing the deficit. We must also make a lot of investments,” Teodorovici said.

 

We will not waive the program “A Family, A House”, the new version of the “First Home” program, as suggested by IMF

 

The Government will not waive the program “A Family, A House”, the new version of the “First Home” program, as suggested at the end of last week by the IMF delegation that assessed the state of the Romanian economy, Finance Minister Eugen Teodorovici stated on Tuesday.

“Definitely not”, Teodorovici answered, when asked about the possibility to gradually waive the program.

“There was a discussion at the NBR related to changing the First Home program, and soon we will have a final conclusion on this new form of the plan. ‘A Family, A House’ is much better and attractive, particularly for the young families”, the Minister said.

The IMF mission suggested the Government to gradually remove the First Home program.

The program “A Family, A House”, which is currently only a draft, could replace the provisions of the “First Home” program. According to the draft law, the state can guarantee 80% of the loan granted by the state, compared to the “First Home” program by which the state guarantees 50% of the loan for houses that are newer than five years, respectively 40% for houses that are older than five years. The maximum limit of the loan can be up to RON 570,000, approximately EUR 120,000. The proposed advance is between 5 and 10% of the requested amount. The house must have at least two rooms and a total area not exceeding 100 square meters. The interest is fixed, 5.5% per year, for the entire period of the loan. Compared to “First Home”, the interest consists of a fixed margin of maximum 2% plus a variable interest, as in the case of the “First Home” program.

The Public Finance Ministry will pay the fee for the management of these loans. The maximum aged of the beneficiaries of the Program “A Family, A House” is 55. The program also provides subsidies to be granted, as follows: the decrease by 2.6% of the interest rate for the beneficiaries with a monthly net income in 2019: lower than RON 6,000 for one person; lower than 7,000 for a family consisting of two adults, or a beneficiary who is a foster care for one child; lower than 8,000 for a family with one child; lower than 9,000 for a family with two or more children.

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