Discussions on fiscal transparency were held in Bucharest during May 14-24, 2002. The staff team comprised Mr. Tsibouris, Ms. Jacobs (both FAD), and Mr. Webber (FAD panel of fiscal experts). It met with officials from the Ministry of Public Finance, Ministry of Health, Ministry of Public Administration, Ministry of Development and Prognosis, National Bank of Romania, National Institute of Statistics, the Authority for Privatization and Management of State Ownership, Bank Asset Resolution Authority, Court of Accounts, National Health Insurance Fund, Finance Commission of the Chamber of Deputies, Chamber of Commerce of Romania, and Petrom (state-owned oil company).
The constitution gives broad guidance regarding centralized public administration, particularly Articles 115-118, with more specific definition in the Law on the Functioning of Government, No 90/2001 and die Law on Public Finance, No. 500/2002 (which superceded Law No. 72/1996). Local administrations are also guided by the Constitution (Articles 119-122) as well as the Law on Functioning of Local Administration, No. 215/2001 and the Law on Local Public Finance, No. 189/1998.
These four funds are the Energy Development Fund, the Road Modernization Fund, the Insurance Guarantee Fund, and the Agricultural Development Fund.
General government currently consists of the following entities: the Presidency, the Senate, the Chamber of Deputies, the Supreme Court of Justice, the Constitutional Court, the Public Procuracy, 23 ministries, 25 other agencies, the state social security fund, the unemployment insurance fund, the health insurance fund, 4 special funds (see footnote 3), 41 districts (judets) plus the city of Bucharest, and approximately 3,000 local government units.
Such non-commercial activities include energy provision (e.g., household heating), urban passenger transport, and railway passenger transport.
A new Law on Privatization, No. 137/2002 was approved by Parliament in August 2002.
APAPS, a public institution with legal status, was established by Government Emergency Ordinance No. 296/2000. Its organizational structure and regulations were established by Government Decision No. 678/2001. Prior to the establishment of the Authority for the Privatization and Management of State Ownership (APAPS), the State Ownership Fund was solely responsible for privatization. The responsibility for privatizing state assets is now assigned to both APAPS and relevant sectoral ministries.
The staff of APAPS is remunerated more in line with the private sector.
A useful reference to the regulatory regime can be found in: Red Tape Analysis: Regulation and Bureaucracy in Romania, The Center for Institutional Reform and the Informal Sector, 2000 (USAID: Bucharest).
The following detailed information is available from APAPS on selected companies under state ownership: (i) contact details and the physical address; (ii) registration number and tax code; (iii) listing of share holders (also expressed in percentage of total); (iv) field of main activity; (v) transport facilities; (vi) share capital; (vii) financial data (annual data from 1997 to the first quarter of 2001) on turnover, profit/losses, debts; and (viii) number of employees.
Articles 8-18 in the Law on Local Public Finance, No. 189/1998 set out the revenues and expenditures of local budgets.
Local government borrowing is allowed only to the extent that debt service will not exceed 20 percent of total current revenue of the local budget.
These improvements include, among others, increased requirements for public debate of the budget proposals and budget execution accounts; the incorporation of certain special funds into the state budget; and the introduction of financial impact assessments to accompany the initiation of new normative acts. Special funds would be phased out over the course of three years.
See Box 1 for a discussion of Government Ordinances (GO) and Government Emergency Ordinances (GEO).
These funds include: the special fund for public health, the special fund for social solidarity with handicapped persons, the special fund for development and modernization of the customs, the special fund for tourism promotion and development, the special fund for civil aviation, the national fund for solidarity, and the special fund for state education sustenance. The latter has subsequently been eliminated by GEO No. 163/2001. This ordinance eliminated the economic agents’ contribution for the state education sustenance. The same ordinance abolished a special fund for capital risk insurance on machinery, equipment, and industrial installations.
The main tax laws in Romania are: the Law on Profit Tax (No. 414/2002); the Law of the Tax on Income of Individuals (No. 493/2002); the Law on VAT (No. 345/2002); custom duties (Law No. 141/1997 regarding Romania’s customs code and GD No. 1114/2001); excises (GO No. 158/2001, GD No. 163/2002 for the approval of the implementing norms of the GD No. 158/2001), and several local taxes, fees and charges.
The EU is providing technical assistance for this project.
A person’s right to public information cannot be restricted; correct information should be provided and public radio and television services shall be autonomous.
The new Law for the Protection of Classified Information, No. 182/2002 has been criticized in the press for its lack of clarity on what should be regarded as classified information.
A more detailed exposition of current policies and medium-term prospects is provided in the Government’s Pre-Accession Economic Program (PEP) document.
Contingent liabilities are potential expenditure demands, for which the probability and precise amount of payment cannot be accurately known at the time of budget preparation. These (foreseeable) contingent liabilities should not be confused with the debt servicing costs associated with government “guarantees” relating to line ministry external credits. Provision for the latter is made in the Budget. The budget also includes a reserve fund, from which unforeseen outlays can be financed.
A new Law for Public Finance was approved by Parliament in August 2002. The new law includes specific provisions for increasing the degree of public debate on budget issues. The new law specifies that the key macroeconomic and social parameters for budget formulation are to be presented to the Government by the end of March and that the draft Budget is to be submitted to the Parliament by October 15.
See footnote 16.
Includes districts, municipalities, towns, and communes.
This process has become a legal requirement on the Government under the new law on public finances.
Published in September 2001 and to be updated annually.
Calculated based on the cash-based balance of the state budget, special fund, and local government budget balances.
Debt servicing forecasts for 2002 include a ceiling of 2 percent of GDP on interest payments on domestic public debt and a “projection” of 1 percent of GDP for interest payments on external debt.
In the PEP, key identified risks include: (i) higher than expected quasi-fiscal and current account deficits; (ii) banking sector restructuring; and (iii) pension system financing requirements.
The MOPF estimated the stock of State Budget arrears to be equal to 0.4 percent of GDP at end-December 2001.
The new regulations governing public procurement are contained in GO No. 60/2001 and GD No. 461/2001. The government is also initiating an Internet-based bidding system for government procurement contracts.
The law does not provide guidance relating to the timing of Parliamentary debates of the Court of Accounts’ annual report.
The National Institute of Statistics organizes and coordinates the compilation and reporting of official statistics in Romania, in accordance with the provisions of GO No. 9/1992, as amended by GEO No. 75/2001 and Law No. 311/2002. The organization and functioning of the National Institute of Statistics is governed by GD No. 488/2001.