Controversy regarding Romania’s finances

Without measures, this years budget deficit may reach 4% of the GDP, says the finance minister in Romanias new Liberal government.

Ştefan Stoica, 15.11.2019, 13:50

The finance minister Florin Cîţu said on Thursday that the economic and financial situation inherited from the
Social Democratic government, in particular his predecessor Eugen Teodorovici, exceeds
the most pessimistic expectations. He made unprecedented accusations, saying
Romania has been run in the last three years based on two budgets, one
presented publicly in Parliament and another, containing real data, used to
finance the Social Democrats’ local leaders. The mechanism, translated,
according to Cîţu, into a mafia-type double accounting system, allegedly used
budget adjustments to take money out of investments and redirect it to the
party. Minister Cîţu says he is considering getting the criminal prosecution
bodies involved to look at whether an organised criminal group was created in
relation to the situation of public finance. The deficit discovered amounts to
21 billion lei, the equivalent of 4.4 billion euros, according to the real
figures. Florin Cîţu:

The estimated revenue for the first nine months
should have been 249 billion lei. It stands at 228 billion lei, which means 21
billion is unaccounted for. 11 billion represents uncollected money from the
economy. The other half comes from European funds. The deficit for the first
nine months should have been 2.28%. The budget execution in the first nine
months stands at 2.60% and the execution for the first ten months, which I am
presenting today, is 2.84%, which is more than it should have been at the end
of the year. The pension budget has been discussed repeatedly and Parliament has
held an entire debate about the expected surplus to the pension budget. Ten
months into the year, the deficit already stands at 2.9 billion lei. The
situation looks much worse for the end of the year unless something is done.

The conclusion of minister Cîţu is
worrying. Unless measures are taken, especially in respect of tax collection,
the budget deficit is expected to reach 4% at the end of the year, 1% more than
the figure recommended by the European Union. In response, the former finance
minister Eugen Teodorovici has accused his successor of not understanding the
budget and categorically denied the idea of double accounting. Eugen
Teodorovici:

I am profoundly disappointed that Mr.
Cîţu seems unable to understand the budget. With regard to execution, there was
always a difference, which translates as deficit, but if we look at 2019, now,
let’s say, we have 21.7 billion lei in estimated budget revenue and 21 billion
lei in budget expenditure, which very clearly shows that there is no hole in
the state budget. Also, I’ve seen Mr Cîţu’s allegation about crime groups and
double budgets. I don’t think there is a difference between what the finance
minister alleges, at least not at the time I left the finance ministry, and
reality. These are data presented clearly by my colleagues at the finance
ministry and the entire team of professionals and for which they assume
responsibility.

The priorities of the finance
ministry are the adjustment for 2019 and creating a budget for next year.