Joint Parliament houses begin debate on 2010 budget

The joint houses of the Parliament will begin debating today the drafts of the Law of the State Budget and the draft of the law on Social Security for 2010, after last week Senators and Deputies submitted thousands of amendments.

The first session for debating and adopting the two draft laws, which need to pass by January 16th, and sent to the Presidency for enactment, is scheduled to begin at 16:00 hours,.

The members of the Parliament managed to meet the schedule for debating the two draft laws, but only barely. It took no less than 18 hours of work to have the reports drawn up by the budget-finance commission reach the joint assembly of the two houses.

The last debates on the two drafts began Saturday morning and ended Sunday night at around 4.00 AM, after a marathon meeting, which also brought a first in our Parliament"s activity: the resumption of the ballot concerning the social security budget, after it had failed to pass the first vote.

Following the debates, the members of the parliament passed five amendments which will have a 2.5 billion lei impact on the budget, which is concerned mostly with fiscal steps to fight the crisis.

If the five amendments get past the joint assembly, the lump sum tax will be eliminated, VAT for real estate and construction transactions will be lowered to 5% and the 3% revenue tax will continue to be applicable to microenterprises. Other amendments suggest the restoration of the ability to deduct VAT paid for vehicles and fuel, and another proposes the cutting of the penalty for delayed payment of tax duties from 0.1%/day to just 0.05%/day.

As to what concerns the social securities budget, the rejection of the two amendments which were approved by the labor commission, and which were stirred controversy, were rejected. The two amendments suggested increasing the pension point by 100 lei and cutting the social security contributions by 10%. The Government was unhappy with the two amendments, and members of the Executive warned that if they were to pass, the country would miss the budget deficit target agreed upon with the IMF and the European Commission. Debates on the two amendments, which essentially propose raising pensions and cutting social security contributions, will begin anew.

Sebastian Vlădescu, the minister of Finance, said that the members of Parliament showed professionalism in debating the two draft budget proposals, adding that regardless of the their political affiliations, the members of the parliament understood their budget constraints.

The passing of the budget for 2010 is one of the conditions imposed by the IMF to release the tranches of the loan taken out by Romania. The delegation of the IMF is scheduled to arrive in Bucharest on January 26th, and following the evaluation of the mission, the IMF should release two of the tranches of the loan taken out by Romania, amounting to 2.3 billion Euros, which is needed to fund the foreign deficit and support the exchange rate.

Also in February, Romania is expecting the tranche from the European Commission which is worth 1 billion Euros, which will be used exclusively for paying pensions, salaries and public sector investments.