Theme: Monday, July 29, 2013

PM Victor Ponta: We have an agreement with our international partners regarding budget rectification. Tomorrow, we will adopt a simple ordinance whereby VAT on the entire bread manufacturing chain will be cut to 9 percent. The eventual negative impact on state budget is compensated by an agreed increase in the excises on alcohol and luxury items

Victor Ponta: Good evening. We concluded this phase of discussions with our international partners, European Commission, IMF, and the World Bank and also the interministerial discussions, tomorrow morning, there may be eventual adjustments but not of substance or amplitude.
I wanted only to announce you on the fact that we have an agreement with our international partners regarding the budget rectification from this summer.
Also, I would want to further announce you that we practically concluded the negotiations too for a new agreement with the European Commission, IMF and the World Bank. During tomorrow, the last information procedures to the European Commission, and the IMF, and the World Bank take place, and on Wednesday, both the head of IMF delegation and the representatives of the Commission and we are going to present you all data. This evening, I can present you the main indicators on budget rectification.
First of all, we agreed together, based on economic growth that went beyond the initial forecast, to accept a growth of GDP by 2, 6 billions lei, a consolidated state budget deficit increased from 13, 4 to 14, 7 billions lei – this money was anyway stipulated for the famous PNDI, but as long as we managed to close that programme, practically, we can use the money for something else. The guarantee ceiling was increased by 2 billions lei, to stimulate and help certain national programmes – First House Programme, there are other programmes in which we have a growth of the guarantees ceiling. Also, the net loans for European funds grew to 3 billions lei.
Tomorrow, we will adopt a simple ordinance and immediately, surely, the rectification ordinance whereby the VAT on the entire bread chain production will be cut to 9 percent. The eventual negative impact on state budget, generated by this measure I was very keen on, and which we hope to bring positive effects, first of all regarding combating evasion, but also additional cashing and eventual decreases in prices are compensated by an increase agreed at the excises on alcohol and luxury items.
Also, for the Health Ministry, we will have an additional earmarking of nearly 1 billion lei, covering therefore a non –cashing of 500 millions from clawback tax, and adding concretely 570 millions lei that will be transferred to the National House of Health Insurances for the payment of medicines and services.
At the Health Ministry, nearly 90 millions lei will be earmarked to continue the projects funded by the World Bank, EIB, EBRD. I want to be very clear for everybody what I mean – it is about the maternity wards programmes, that are in various stages of construction, some were finalized and not received, others still need 15-20 percent to be finalized, we will earmark 90 millions lei especially to this programme.
Alike, at the Education Ministry, for the programme to upgrade and repair the schools, programmes concluded for a long time with the World Bank and other international institutions, 40 millions lei, and for justice – 20 millions for the refurbishment of some courts.
I want also to announce that currently, we have an important sum, maybe not enough, but important, 70 millions lei for goods and services at the Interior Ministry for the functioning of the Romanian Police that will surely need additional resources.
The Justice Ministry will also receive nearly 100 millions lei for the functioning of the National Administration of Penitentiaries, 45 millions lei for the functioning of courts and nearly 20 millions lei for the necessary preparations – I am speaking about staff, judges, prosecutors, auxiliary personnel, and all the other necessary spending for the implementation of codes, the new codes, to be covered.
Money is also earmarked from the National Lottery profits, nearly 40 million lei for gyms and buildings at ANL and also tomorrow we will have in the correction, the allocation of sums needed to start the program with equipping with multirole planes, under the agreement that we negotiated with Portugal and closing the first phase of border protection system, for us to be legally and technically, perfectly prepared for a possible positive decision on our accession to the Area Schengen.
I tried through this adjustment, to respond to those imperatives that were absolutely necessary at this time, or pressing.
I also wanted a lot that a political commitment in which we all believe, the reduction of added value tax on bread, to prove a commitment of success and from this point of view, I count and I will rely on a partnership basically between government and associations of producers. The failure of this project, obtained in an extremely difficult way, to be very diplomatic in speech, failure of this project basically will condemn future expansion of this system to other areas, as important, not just for bread. If we have success and it proves that we thought well, to reduce tax evasion, that we practically have better collections and we encourage fair producers, those who emit bills, those who are taxed, surely, success this project will help us to expand a system of differentiated VAT to other categories. I really want to prove that it was a correct project.
I insisted that in a few important programs - and I said maternity wards, schools - we can allocate the amounts necessary for further work. There will be some allocation for the Ministry of Culture, of course, for projects of lesser importance and ability to provide, through a significant allocation, the operation of the National Health Insurance House and practically of healthcare system.
Otherwise, we set out, again, we have the possibility of loans to pursue and accelerate settlement, making and defraying projects on sectoral operational programs and, of course, on agriculture. We hope that this correction to produce positive effects. We are entitled by law and our agreements with international partners to have a new rectification at the end of October. Until then, however, I want the decisions we take tomorrow to prove correct and cover, at least in part, the most urgent needs and expectations. For more highly technical issues, it is Deputy Prime Minister, the Budget Minister here, and the Minister of European funds. If you have a special question for me, I will answer you. If you have something special to me, please ask me, if not, I'll leave the two ministers to answer more technical questions.