Romania

VII - Six-Pack

The ‘Six-Pack’ is a package of six legislative measures (five regulations and one directive) improving the Economic governance in the EU. The Commission made the original proposals in September 2010. After negotiations between the Council and the European Parliament, the package was adopted in November 2011 and entered into force on December 13, 2011. Part of the ‘Six-Pack’ measures applies only to the Eurozone member states (see the individual titles below).        
The ‘Six-Pack’ measures reinforce the Stability and Growth Pact (SGP), among others by introducing a new Macroeconomic Imbalances Procedure, new sanctions (for Eurozone member states) and reversed qualified majority voting. Also, there is more attention for the debt-criterion.       
(
http://ec.europa.eu/economy_finance/economic_governance/index_en.htm)

Negotiation
VII.1
What positions did Romania adopt in the negotiation of the ‘Six-Pack’, in particular in relation to the implications of the ‘Six-Pack’ for (budgetary) sovereignty, constitutional law, socio-economic fundamental rights, and the budgetary process?

In Romania there is no legal rule obliging the executive (President and government Ministers) to get a prior consent or opinion of the legislature on the country positions in European Council or Council meetings, respectively. Equally, there is no administrative practice to publish in advance the negotiating positions of the country. The President usually holds a press conference after the European Council meetings. The national Parliament is usually not involved a priori in the specific discussion of the points on the European Union’s agenda. There is only a constitutional obligation of the Government to send to the two Chambers of the Parliament the proposals of the binding acts before submitting them for the approval of the EU institutions (Article 148(5) Romanian Constitution) – as for instance the draft budget laws.

There is no information available regarding issues related to budgetary sovereignty, constitutional law, social-economic rights or the budgetary process raised by Romania during the Six-Pack negotiations.

As repeatedly stated above, the Romanian executive – both the President and the Government – have been in favour of all crisis legislative action adopted at the EU level, including the adoption of the Six-Pack legislation. As a non-Euro member state, Romania’s position was centred on the necessity to avoid a European Union of “two speeds”, translated for the President of Romania into a necessity to include as far as possible the non-euro Member States into the EU crisis-driven agenda.[1]

Romania was represented at the ECOFIN Council meeting of October 4, 2011 by the Minister of Public Finances Gheorghe Ialomitianu and State Secretary Dan Lazar.[2] Before the ECOFIN meeting of 4 October, 2011, for the informal meeting of the ECOFIN Council of 16-17 September 2011, the Ministry of Public Finances shortly welcomed the agreement reached on the Six Pack, stating at the same time that the “[…] new rules were supported by Romania from the very beginning”.[3]

Directive 2011/85/EU       
Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States

Implementation
VII.2
What measures are being taken to implement Directive 2011/85/EU on requirements for budgetary frameworks (required before 31 December 2013, article 15 Directive 2011/85/EU)?

In Romania the Fiscal Responsibility Law No. 69/2010, adopted prior to the Directive 2011/85/EU, already imposed some of the rules designed to strengthen fiscal discipline.[4] (see also section II.2 above)

Therefore, before the formal implementation of Directive 2011/85/EU, Romania already had binding legislation in several core areas regulated by this legal source.

The rules already in place have been strengthened through the 2013 reform, which amended both the Fiscal Responsibility Law No. 69/2010 (Amendment Law 377/2013)[5] and the Public Finances Law 500/2002 (Amendment Law 270/2013)[6] to further align the existing rules with Directive 2011/85/EU and Fiscal Compact requirements (see section IX, below). The 2013 amendments to the Fiscal Responsibility Law and Public Finances Law were adopted by the Parliament on 23rd December 2013 (in force since 01.01.2014) and 18 October 2013 (in force since 21.10.2013) respectively.

 

The following measures have been put in place according to the five main pillars of Directive 2011/85/EU:

Accounting and statistics

Romania committed within the agreement with the European Commission and IMF to adopt progressively the ESA 95 (European System of Accounts). The Romanian authorities reported to apply the system since 2006.[7]

The 2013 reform takes the commitment one step further towards full adoption of the ESA standards:

– Based on the provisions of Article 3(2) a) of Directive 2011/85/EU, the Ministry of Public Finances must publish monthly and quarterly the accounting data corresponding to the cash-based fiscal data on its webpage (Article 34-1 Fiscal Responsibility Law as amended in 2013).

– Responding to Article 3(2) b) of Directive 2011/85/EU, a table of correspondence between the national public accounting system and EU system shall be included in the Final Report on the budgetary execution published by the Ministry of Public Finances annually (Article 34-1 Fiscal Responsibility Law as amended in 2013)

– As well in order to increase the administrative capacity to fully employ the ESA 95 system, each public institution must designate an accounting-financial division. The director of the accounting-financial division must hold a certificate of proficiency in the European System of Accounts (Article 19-1, b-2) Public Finances Law as amended in 2013).

Forecasts

– The National Commission for Prognosis is responsible for the macroeconomic and social forecasts (Article 31, Law 500/2002 on Public Finances). Please refer to section VII.4 below.

– According to Article 4 (1) of Directive 2011/85/EU the prudent macroeconomic forecasts have been introduced as of 2013 (Article 18-1 Fiscal Responsibility Law as amended in 2013)

– According to Article 4 (4) of Directive 2011/85/EU the Medium Term Budgetary Framework (MTBF) shall include a sensitivity analysis of the fiscal goals to the change of macroeconomic variables and the sensitivity analysis of the public debt depending on different growth scenarios for a six years time-frame: results of two previous years, the estimates for the current year and prognosis of the three following years (Article 20-2 Fiscal Responsibility Law as amended in 2013)

– As of 2013, the Fiscal Council is the institution tasked to check ex-post the accuracy and reliability of the macroeconomic forecasts. In case of persistent deviations for a period of at least 4 years of the macroeconomic data, the Council notifies the Government which is obliged to take and publish the ‘necessary measures’ (Article 40 Fiscal Responsibility Law as amended in 2013).

– The macroeconomic forecasts used as basis for the budget planning shall follow closely the forecasts of the European Commission and other international independent institutions; any derogation shall be dully motivated (Article 30-2 Public Finances Law as amended in 2013).

Numerical fiscal rules

Already in 2010 the first numerical rule to be approved by Romania was the realisation of an annual budgetary balance equal to zero that would then be maintained and directed towards a surplus. This is a major change for Romania, known for a deficit-equilibrated budget tradition rather than a surplus one.

In 2013, the express numerical figures on budget deficit and public debt were introduced. Article 5-1 of the Fiscal Responsibility Law as amended in 2013 states expressly that according to Protocol 12 to the TFEU the: budgetary position of the public administration is either balanced or in surplus.

The budgetary position is balanced or in surplus, respectively the requirements of Protocol 12 to the TFEU, are considered fulfilled when one of the three scenarios below is complied with (Article 5-2 Fiscal Responsibility Law as amended in 2013):

“(a) The medium-term budgetary objective does not exceed a lower limit of the annual structural balance of the public administration of -0.5% of GDP expressed at market prices;

(b) When the ratio between the public debt calculated according to the EU methodology and the GDP at market prices is significantly below 60% and when the risks related to long-term sustainability of public finance are low, the lower limit of the medium-term budgetary objective may not exceed an annual structural balance of the public administration of maximum -1.0% of GDP at market prices;

(c) The annual structural deficit of public administration converges towards the medium-term budgetary objective according to an adjustment path agreed with the institutions of the European Union, according to the Council Regulation (EC) no. 1466/1997, as subsequently amended and supplemented.”[8]

– Other fiscal rules concern the prohibition to engage in budget spending 180 days before the end of the Government mandate (Article 9); the prohibition to operate more than two modifications of the budget laws during the budgetary year (Article 15(2)); the complete prohibition to operate any modification to the adopted budget in the first six months unless in exceptional emergency situations; the funds’ allocation to primary credit holders is performed only annually in the context of the budget laws.

– Most importantly, sanctions are introduced in case of non-compliance with the fiscal rules. As such the Government jointly or the members of the Government individually and the primary credit holders may be held accountable for failing to observe the above rules (Article 52-54 Fiscal Responsibility Law). The 2013 amendment brings some clarification on the form of guilt needed to enforce the sanctions.

Medium-Term Budgetary Framework (the ‘MTBF’)[9]

Since 2010 a three-year ‘Fiscal-Budgetary Strategy’ has been introduced as an additional budgeting stage (Article 18-20 Fiscal Responsibility Law). The Fiscal-Budgetary Strategy is a public policy document elaborated each year by the Ministry of Public Finances by the 31st of July and approved by the Government. The strategy is presented to the Parliament yearly, by August 15. The annual budget laws must take into consideration the Fiscal-Budgetary Strategy (Article 28 Public Finances Law).

As of 2013, the Public Finances Law introduces another explicit ‘Budgetary Framework of Romania’ and ‘Medium-Term Budgetary Framework’  (Chapter III, Section 1-1, Articles 30-1 to 30-5, Public Finances Law). The implementing provisions state that the ‘Budgetary framework of Romania’ shall closely follow the EU Budgetary framework in order to avoid the excessive public deficit and respect the obligations under TFEU and other treaties ratified by Romania (Articles 30-1 Public Finances Law). The medium-term budgetary framework is the basis for the annual budgetary framework; in case of a change in Government the new cabinet may perform changes to the MTBF, however these must be separately detailed and explained (Articles 30-5 Public Finances Law).

Monitoring

A Fiscal Council was put in place as of 2010 corresponding to the provisions of Article 6(1) b) of Directive 2011/85/EU and the relevant provisions of the Fiscal Compact (see Chapter X of the Romanian Fiscal Responsibility Law). For the Fiscal Council and Fiscal Compact please see sections VII.5 and IX, respectively.

The Ministry of Public Finances checks ex ante the compliance of the primary credit holders with the targets and spending ceilings set by the MTBF, having the possibility to reject the proposed budgets of the primary credit holders if not in compliance with the first (Article 21(3) Fiscal Responsibility Law).

Implementation difficulties 
VII.3
What political/legal difficulties did Romania encounter in the implementation process, in particular in relation to implications of the directive for (budgetary) sovereignty, constitutional law and the budgetary process?

In late December 2013 Romania adopted new legislation to implement Directive 2011/85/EU, which updates and reinforces the already existing rules in national legislation (Law No 69/2010) (see section VII.2, above).

As Romania was already under the financial supervision of the European Commission, IMF and World Bank since 2009, there were no specific debates regarding the new Directive and the additional implementing measures provided for by Law 377/2013.[10]

One of the main features of the multilateral financial assistance programme between Romania on the one hand and the European Commission, IMF, World Bank, European Bank for Reconstruction and Development (EBRD) and European Investment Bank (EIB) on the other, was the adoption and implementation of a series of far-reaching fiscal governance reforms, including the adoption of a Fiscal Responsibility Law in 2010. The aim of these reforms was to address the weaknesses in Romania’s fiscal institutional framework so as to strengthen the fiscal discipline and avoid the budgetary slippages of the past.[11]

These 2013 amendments were passed without particular debates as these were listed last on the agenda of the Parliamentary session, on December 2nd at 18.30 in the evening.[12] As the amendment law also contained several provisions implementing the Fiscal Compact due to be implemented by January 1st 2014, the emergency legislative parliamentary procedure was used. The law was voted in the Parliament on December 10, 2013 with 242 votes FOR out of 310 Members of the Chamber of Deputies present.[13]

On the implementation of the first 2010 budgetary framework requirements (Law 69/2010 on Fiscal Responsibility) there was more discussion, in particular with regards to the very short notice of the Parliament, the emergency legislative procedure, the mere ten minutes allocated for the parliamentary debates and the ‘last minutes rush’ to implement the law.[14]

After the approval of the Senate on March 03, 2010, the Law proposal was decided by the Chamber of Deputies. According to the Parliamentary session stenograph of March 30, 2010, the legislative proposal was presented by the Minister of Public Finances personally in the Parliament just one day before the end of the time-frame to implement the measures agreed with the international partners (March 31st). All the political groups took the floor. The law was seen as a requirement due to fulfil for the IMF by March 31st 2010. None of the interventions questioned the necessity of the law as the credibility of Romania and the financial stability of the country were at stake. However all the interventions underlined the importance of the new provisions and criticised the extremely brief time allocated for the debates. Form this point of view the opposition qualified the process as a ‘legislative massacre’.[15]

The law was passed by simple majority of the present members of the Parliament on March 30, 2010 at 12.13 PM (FOR – 135, Against – 97, Abstentions – 1).[16] At 12.45 PM, fifteen minutes after the bill was passed, the General Director of the IMF, Dominique Strauss-Kahn, made a one-hour intervention in the Parliament of Romania.[17]

Macroeconomic and budgetary forecasts     
VII.4
What institution will be responsible for producing macroeconomic and budgetary forecasts (article 4(5) Directive 2011/85/EU)? What institution will conduct an unbiased and comprehensive evaluation of these forecasts (article 4(6) Directive 2011/85/EU)?

The National Commission for Prognosis is responsible for providing macroeconomic forecasts for the reference budgetary year and the following three years, with yearly updates (Article 31, Public Finance Law No. 500/2002).[18] The National Commission for Prognosis is a public body (a unit from 1990-1993) in the subordination of the Ministry of Public Finances established in 1990, in charge of short, medium and long-term macro-economic and social forecasts, in line with the National Reform Programme, National Convergence Programmes and European Commission indicators.[19] In view of budget planning, the National Commission for Prognosis publishes the macroeconomic and social mid-term forecasts by the 1st of June each year (Article 31, Public Finance Law No. 500/2002). The forecasts are elaborated for the reference budgetary year and the three following years. The autumn updates of the forecasts are taken into consideration in the final draft of budget laws.

The forecasts are reviewed by the Fiscal Council, published, and considered by the Government and Parliament for the approval of budgetary plans (Article 40 Fiscal Responsibility Law). The Fiscal Council conducts an impartial, periodical, comprehensive and ex post evaluation of the forecasts (Article 30-4 Fiscal Responsibility Law). As of 2013, ‘other habilitated bodies’ may conduct the forecasts review if delegated. On the Fiscal Council see section VII.5 below. This is not the case yet. The forecasts feed into the Fiscal-Budgetary Strategy approved by the Government and published on the Ministry of Public Finances’ websites, and forms the basis for the annual budget laws (on forecasts see also section VII.3 above).

 

Fiscal Council  
VII.5
Does Romania have in place an independent Fiscal Council (article 6(1) Directive 2011/85/EU: ‘independent bodies or bodies endowed with functional autonomy vis-à-vis the fiscal authorities of the Member States’)? What are its main characteristics? Does Romania have to create (or adapt) a Fiscal Council in order to implement Directive 2011/85/EU?

One of the main objectives of the Fiscal Responsibility Law of March 2010 – prior to the adoption of Directive 2011/85/EU – was to set up the Fiscal Council (Article 40-48 Fiscal Responsibility Law).[20]

According to Chapter X of the Fiscal Responsibility Law, the Fiscal Council is set as an independent authority composed of five members with extensive expertise in budgetary and macroeconomic policies, invested for a single 9 years mandate by Parliament decision. The Council’s design corresponds to the criteria of institutional, personal and financial independence. The legal provisions lay down extensive rules to ensure the independence and integrity of the Council members, their financial autonomy and the authority of the Council’s competences.

The Fiscal Council supports the Government and the Parliament in planning the medium and long-term fiscal-budgetary strategy. It provides analysis and issues opinions on the official macroeconomic and budgetary forecasts, monitors the compliance with the rules and principles of the Fiscal Responsibility Law, especially with regard to the automatic correction mechanism and emergency situation rules.

The Fiscal Council assesses the performance of the Government against fiscal targets and policies, prepares cost estimates and issues opinions on the amendments made to the annual budget law during parliamentary debates. It also provides information and advice to the Government and Parliament on legislative recommendations for maintaining and strengthening fiscal discipline and transparency of fiscal policies (Article 40 Fiscal Responsibility Law).[21] Other authorities are obliged to engage in a loyal cooperation with the Fiscal Council and provide upon request all the necessary data (Article 41 Fiscal Responsibility Law).

The main output of the Fiscal Council is an annual report which contains the post evaluation of the macroeconomic and budgetary estimates of the fiscal budgetary strategy (Article 40 (2) a) Fiscal Responsibility Law), the assessment of progress against objectives, targets and policies set out in the budget fiscal strategy and the annual budget (Article 40 (2) b) Fiscal Responsibility Law), the assessment of the government’s compliance with the principles and rules of the Fiscal Responsibility Law (Article 40 (2) c) Fiscal Responsibility Law), as well as recommendations and opinions for improving the conduct of fiscal policy. In addition to its annual report, the Fiscal Council also publishes all the opinions, forecasts, analyses and recommendations that it issues during the year (art. 40 (2) d) Fiscal Responsibility Law).

The Fiscal Council issues opinions and recommendations on the main documents that are part of the budgetary process. Both the Government and the Parliament are held to take into account the opinions and recommendations of the Fiscal Council when elaborating and approving the fiscal strategy and the annual budgets (Articles 24 and 25 Fiscal Responsibility Law).

The Fiscal Council also assesses the budgetary performance of the Government against fiscal targets and policies and prepares cost estimates and opinions on the amendments made to the annual budget law during parliamentary debates. Moreover, 60 days before general elections, the presidents of the political parties may ask the Fiscal Council (or alternatively, the Prime Minister) to calculate the financial impact of any of the policies announced by the parties (Article 38 Fiscal Responsibility Law).[22]

Regulation No 1176/2011 on the prevention and correction of macroeconomic imbalances 
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32011R1176:EN:NOT)

MEIP difficulties     
VII.6
What political/legal difficulties did Romania encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law, socio-economic fundamental rights, and the budgetary process?

There is no information on specific debates regarding the new Regulation.

It must be noted that the macroeconomic imbalances procedure does not apply to Romania. As a Member State implementing macroeconomic adjustments programmes under financial assistance, the macroeconomic imbalances and the relevant policies adopted are monitored within the framework of the specific programmes for Romania.[23]

Regulation No 1175/2011 on strengthening budgetary surveillance positions    
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1997R1466:20111213:EN:PDF)

MTO procedure
VII.7
What changes to the rules on the budgetary process are made to accommodate the amended Medium-term Budgetary Objective (MTO) Procedure?

Before 2011, the fiscal framework of Romania has been significantly reformed in 2010, following the adoption of the Fiscal Responsibility Law 69/2010.

The Fiscal Responsibility law of 2010 (Articles 18-20 Fiscal Responsibility Law) mandated the adoption of a three-year Fiscal-Budgetary Strategy with targets for deficit rates and public expenditure, reimbursable financing as well as the adoption on an annual basis of a law on ceilings for guarantees and public expenditure. As well, since 2009 the Government of Romania, through the Ministry of Public Finances was charged to elaborate and publish yearly the National Convergence Programmes.[24] Nevertheless, regarding the budgetary process, the European Commission considered in 2013 that: “[t]here [was] room for improvement in the context of the medium-term budgetary framework as well as in terms of compliance with the existing budget ceilings. Despite some steps taken to prioritise public investments, a strategy needs to be developed and implemented in this area and to be properly reflected in the medium-term budget planning.”[25]

In response, in late 2013 the reform of the two legal frameworks – Fiscal Responsibility Law and the Public Finances Law – introduced expressly the Medium –Term Budgetary Objective (MTO) and the relating corrective mechanism procedure.

As of 2013 the Fiscal Responsibility Law is amended as follows:

The MTO has been expressly defined as a: “target of the annual structural balance of the public administration, established according to EC Council Regulation no. 1466/1997 of 7 July 1997, on strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies, published in the Official Journal of the European Union, series L, no. 209 of 2 August 1997, as subsequently amended and supplemented”. (Article 3 (6-2) Fiscal Responsibility Law as amended in 2013)

Annually, the Ministry of Public Finance drafts the three-year Fiscal-Budgetary Strategy identifying inter alia the ceilings on expenditure for the respective period. The ceilings indicated in the Fiscal-Budgetary Strategy are sent separately in the form of a legislative proposal for approval by the Parliament by August 15 annually. As of 2013, the legal proposal shall include also the MTO and the concrete modality through which the Government plans to adjust towards it (Article 18 (2-1) Fiscal Responsibility Law). Therefore, the MTO is adopted by binding normative law before the adoption of the annual budget. In 2014 the law on ceilings will include for the first time the MTO. In practice until present the law on ceilings was adopted by the Parliament on the same date with the annual budget laws.

European semester 
VII.8
What changes have to be made to the rules and practices on the national budgetary timeline to implement the new rules on a European Semester for economic policy coordination (section 1-A, article 2-a consolidated Regulation 1466/97)?

In 2013, Romania adopted new legislation to accommodate the provisions of the Fiscal Responsibility Law No 60/2010 as well as the budgetary calendar of the Public Finances Law 500/2002 to the European Semester calendar.

Please also see section II above.

As presented in the table below, the budgetary calendar has been substantially modified to enable the national Government to properly assess and implement the outcome of the European Semester. In general, one may note that the overall calendar has been shifted with about two months.

First, the National Prognosis Commission has to publish the macroeconomic and social forecasts by June 1st compared to the prior March 31st deadline. Second, in order to implement the European Commission’s May-June country-specific recommendations, the Ministry of Public Finances shall submit to the Government the Fiscal-budgetary Strategy together with the legal proposal on budget ceilings including MTO by July 31 instead of May 1st. The prior arrangement made it practically impossible to take the Commission’s recommendation into consideration before the first budget draft. Third, after the Commission’s recommendations are approved by the European/Council in June-July, the Government sends the Fiscal-Budgetary Strategy and the law on the ceilings to the Parliament (August 15, compared to the prior June 15) for approval and also to primary ordinateurs who draft their respective budget proposals based on the documents received (August 1st compared to the prior June 1st). Lastly, after the September-October Council resolutions the Government sends the final budget draft to the Parliament by November 15 for debates and adoption (compared to the prior October 15).

 

 

Table VII.8.1. Comparative budget timeline analysis[26]

Prior to 2013

2013 Reform

31 March

National Prognosis Commission provides preliminary macroeconomic forecasts (Art. 31 of the Law on Public Finance).

National Prognosis Commission provides preliminary macroeconomic forecasts (Art. 31 of the Law on Public Finance).

1 June

 

 

May-June European Commission Country Specific Recommendations

1 May

Ministry of Public Finances (MPF) submits proposed spending frame for the next budgetary year and the spending estimates for the next three years to the government for main political discussions (Art. 32 of the Law on Public Finance).

Ministry of Public Finances submits the multiannual fiscal budget strategy for the next three years to the Government (Law on Fiscal Responsibility Article 18)

31 July

15 May

Government approves the ceilings set for main primary ordinateurs as well as fiscal and budgetary policy objectives for the following three years.

Ministry of Public Finances submits proposed spending frame for the next budgetary year and the spending estimates for the next three years, and the MTBO to the government for main political discussions (Art. 32 of the Law on Public Finance).

31 July

 

 

June-July European Council and Council discussion and approval of Country Specific Recommendations

1 June

Ministry of Public Finance sends primary ordinateurs a framework letter and key macroeconomic assumptions, the methodology for drafting the budget, and the expenditure ceilings approved by government (Art. 33 (1) of the Law on Public Finance).

Ministry of Public Finance sends primary ordinateurs a framework letter and key macroeconomic assumptions, the methodology for drafting the budget, and the expenditure ceilings approved by government (Art. 33 (1) of the Law on Public Finance).

1 August

15 June

Modification and approval to ceilings based on macroeconomic assumptions (Art. 33 (2) of the Law on Public Finance).

The Government sends the multiannual fiscal budget strategy for the next three years to the Parliament (Law on Fiscal Responsibility Article 18)

The Government sends the Law on budgetary ceilings and MTBO to the Parliament (Law on Fiscal Responsibility Article 18 (2-1))

15 August

15 July

Primary ordinateurs submit budget proposals with three next year estimates to the Ministry of Public Finance (Art. 34 of the Law on Public Finance).

Primary ordinateurs submit budget proposals with three next year estimates to the Ministry of Public Finance (Article 34 of the Law on Public Finance).

If not in line with the Fiscal and budgetary strategy and ceilings the Ministry of Finance may reject the budgets according to article 21(3) of Fiscal Responsibility Law

1 September

 

 

Primary ordinateurs send the amended budget proposals to the Ministry of Public Finance

15 September

1 August

Conclusion of discussions on departmental budget submissions.

 

 

30 September

Preparation and submission to government of final draft budget (Art. 35 of the Law on Public Finance).

Ministry of Finance drafts the proposals of budget laws and budgets and submits them to the Government for a first reading

30 September

 

 

September-October Council Resolutions

 

 

Ministry of Public Finance submits the adapted budget in line with autumn forecast of National Prognosis Commission

1 November

15 October

Submission of draft budget to Parliament.

Government approves the budget and sends it to the Parliament

15 November

 

 

If a decision on the budget is not taken, the Government may request the examination of the budget proposal in emergency procedure

15 December

By 28 December

Final approval of budget by Parliament (Art. 36 of the Law on Public Finance).

Final approval of budget by Parliament (Art. 36 of the Law on Public Finance).

By 28 December

 

MTO difficulties         
VII.9
What political/legal difficulties did Romania encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law and the budgetary process?

No political or legal difficulties were encountered nor were there debates specific to Regulation 1175/2011/EU. The amendments were seen as necessary and positive measures, meant to align the national budgetary process to the ‘EU model’. As stressed above, the emanations of the EU level generally enjoy large political and social support, thus the necessary legislative and procedural accommodations were introduced without difficulties reported (see section VII.1 above).

Respect MTO     
VII.10
How is respect of the Medium-term Budgetary Objective included in the national budgetary framework (section 1A, article 2a consolidated Regulation 1466/97)?

The provisions ensuring the respect for the MTO and the mechanism to correct the deviations are set under the Fiscal Responsibility Law 69/2010 as amended in 2013 (Section 4, Article 6-2).[27]

In case of deviations from the established MTO, the automatic correction mechanism is launched as of 2013 (Article 6-2 Fiscal Responsibility Law). According to the legal provisions in force, the existence of a deviation shall be assessed based on Article 6 of the Regulation (EC) 1466/97 as amended by Regulation (EU) 1175/2011. The divergence is ascertained based on the documents issued by the EU Institutions or by the Government based on the opinion of the Fiscal Council. In this scenario, the Government shall approve the measures necessary to correct the identified deviation or if the law containing the MTO has been adopted already by the Parliament, the Government shall send the Parliament the measures aiming to correct the deviation for adoption. The measures proposed must be quantifiable (broken down by year), effective (must prove effectiveness already in the first budgetary year), proportionate and in line with the EU institutions’ recommendations. The Fiscal Council issues also an opinion on the correction measures. The existence of the divergence shall be also communicated to the Parliament Committee on budget, banks and finance.

Equally, the Annual Report on the budgetary execution of the Ministry of Public Finances shall evaluate the results of the budgetary year having regards to the MTO, the deviation and the concrete adjustment methods envisaged (Article 33 Fiscal Responsibility Law).

Current MTO    
VII.11
What is Romania’s current Medium-term Budgetary Objective (section 1A, article 2a consolidated Regulation 1466/97)? When will it be revised?

As established in the Convergence Programme 2014-2017, “the general objective is to reach MTO in 2015, with a structural deficit of 1% of GDP, after the removal of the excessive deficit procedure expected in 2013 was confirmed”.[28] The structural deficit is to be maintained at 1% also in 2016 and 2017. The structural deficit for 2014 is 1.4%.

Romania’s public debt is relatively low (39.9% of GDP in 2014) and it is expected to decrease to 39.6 % in 2015, 39,1% in 2016 and 38,5% in 2017, thus well below the 60% of GDP limit.[29]

The MTO is expected to be revised in 2015, when the Ministry of Public Finances shall publish the National Convergence Programme for 2015-2018.

Adoption MTO  
VII.12
By what institution and through what procedure is Romania’s Medium-term Budgetary Objective adopted and incorporated in the stability programme (Eurozone, article 3(2)(a) consolidated Regulation 1466/97)?

Romania’s MTO is adopted and incorporated into the National Convergence Programme by the Ministry of Public Finances. Starting with January the 1st, 2014 the Ministry of Public Finances shall include the MTO in the legislative proposal on the budgetary ceilings and send it for approval to the Parliament by August 15 (article 18(2-1) Fiscal Responsibility law). The Parliament approves the law by simple majority.

Regulation No 1177/2011 on the excessive deficit procedure
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1997R1467:20111213:EN:PDF)

EDP difficulties
VII.13
What political/legal difficulties did Romania encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law and the budgetary process?

No legal or political difficulties were encountered nor did any significant debates specific to Regulation 1177/2011/EU arise.

Regulation No 1173/2011 on effective enforcement of budgetary surveillance     
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32011R1173:EN:NOT)

Sanctions
VII.14
What political/legal difficulties did Romania encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law and the budgetary process?

Regulation 1173/2011 shall apply to Romania once it adopts the Euro currency.

General changes     
VII.15
What further changes have to be made to the rules on the budgetary process in order to comply with the Six-Pack rules?

For the moment no further changes are envisaged by Romania to comply with the Six-Pack rules. The 2013 reform included a comprehensive set of rules meant to fully address the changes in national legislation necessary to implement the Six-Pack.

Miscellaneous
VII.16
What other information is relevant with regard to Romania and the Six-Pack?

Not applicable.

[1] Presidency of Romania, Autumn Summit 2011, Press release, available at: http://cms.presidency.ro/?pag=59&year=2011&sid=13541&id_p=13577

[2] Fiscal Courier Journal, news item, available at: http://www.curierulfiscal.ro/2011/10/08/reuniunea-consiliului-ecofin-luxemburg-4-octombrie-2011/

[3] http://discutii.mfinante.ro/static/10/Mfp/afaceri_europene/buletin23septembrie2011.pdf

[4] Law 69/2010 on Fiscal Budgetary Responsibility, Official Journal 252 /20.04.2010, available in Romanian at: http://www.mfinante.ro/legisbuget.html?pagina=domenii

[5] Law 69/2010 as amended by Law 377/2013 on Fiscal Budgetary Responsibility in force as of 01.01.2014, available in English at: http://www.fiscalcouncil.ro/legea.htm

[6] Law 500/2002 on Public Finances and amendment Law 270/2013, available in Romanian at: http://www.mfinante.ro/legisbuget.html?pagina=domenii

[7] European Commission, Interim Progress Report on the implementation of Council Directive 2011/85/EU on requirements for budgetary frameworks of the Member States, February 2013, available at: http://ec.europa.eu/economy_finance/publications/occasional_paper/2013/pdf/ocp128_en.pdf

[8] Law 69/2010 as amended by Law 377/2013 on Fiscal Budgetary Responsibility in force as of 01.01.2014, available in English at: http://www.fiscalcouncil.ro/legea.htm

[9] Law 377/2013 amending the Law 69/2010 of fiscal responsibility, Official Journal 826 of 23.12.2013, available in Romanian at: http://discutii.mfinante.ro/static/10/Mfp/legislatie/lege377_2013modif69_2010.pdf. See also the legislative file, opinions and procedure (Romanian) at: http://www.cdep.ro/pls/proiecte/upl_pck.proiect?cam=2&idp=13787

[10] Parliament of Romania, Legislative fine PL x- 534/2013 on the amendment of the Law 69/2010 on Fiscal budgetary responsibility, available at: http://www.cdep.ro/pls/proiecte/upl_pck.proiect?cam=2&idp=13787

[11] Fiscal frameworks across Member States: Commission services country fiches from the 2011 EPC peer review, European Economy, Occasional Papers 91, February 2012, p. 60.

[12] Parliament of Romania, Legislative fine PL x- 534/2013, December 2, 2013, Debates,  http://www.cdep.ro/pls/steno/steno.stenograma?ids=7328&idm=4

[13] Parliament of Romania, Legislative fine PL x- 534/2013, electronic vote, available at: http://www.cdep.ro/pls/steno/eVot.Nominal?idv=11355

[14] Parliament of Romania, Legislative fine PL x- 65/2010, March 30, 2010, debates, available at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=6794&idm=6

[15] Ibidem.

[16] Parliament of Romania, Legislative fine PL x- 65/2010, electronic vote, available at: http://www.cdep.ro/pls/steno/eVot.Nominal?idv=5987

[17] Parliament of Romania, United Chambers, session March 30, 2010, Intervention of General Director of IMF, available (Romanian) at: http://www.cdep.ro/pls/steno/steno.stenograma?ids=6790&idm=1&idl=1

[18] Law 500/2002, amended in 2013, available in Romanian at: http://www.mfinante.ro/legisbuget.html?pagina=domenii

[19] National Commission for Prognosis, official page, available at: http://www.cnp.ro/en/istoric

[20] Fiscal Responsibility law 69/2010, English, available at: http://www.fiscalcouncil.ro/legea.htm. See further the official web page of the Fiscal Council, available at: http://www.fiscalcouncil.ro

[21] European Commission, Occasional Papers 91, February 2012 http://ec.europa.eu/economy_finance/publications/occasional_paper/2012/pdf/ocp91_en.pdf , Law 69/2010 on Fiscal responsibility as amended in 2013, arts 40-47.

[22] European Commission, Occasional Papers 91, February 2012: Fiscal frameworks across Member States: Commission services country fiches from the 2011 EPC peer review, p. 60, available at http://ec.europa.eu/economy_finance/publications/occasional_paper/2012/pdf/ocp91_en.pdf

[23] European Commission, Communication (2014) 150 Final, Results of in-depth reviews on the prevention and correction of macroeconomic imbalances, of 05.03.2014, p.3, available at: http://ec.europa.eu/economy_finance/economic_governance/documents/2014-03-05_in-depth_reviews_communication_en.pdf

[24] Ministry of Public Finances, National Convergence Programmes since 2009 (Romanian), available at: http://www.mfinante.ro/programDeConvergenta.html?pagina=programConvergenta

[25] Commission Staff Working Document, Assessment of the 2013 national reform programme and convergence programme for Romania, p. 14, available at: http://ec.europa.eu/europe2020/pdf/nd/swd2013_romania_en.pdf

[26] Source: Law 500/2002 on public finances before and after the amendment by law 270/2013.

[27] Law 69/2010, as amended in 2013, the English version available at: http://www.fiscalcouncil.ro/legea.htm

[28] National Convergence programme 2014-2017, pp.33-34, available at: http://ec.europa.eu/europe2020/pdf/csr2014/cp2014_romania_en.pdf

[29] Ibidem, p. 40.