Romanian president challenges 2019 budget bill

by Reuters
Friday, 22 February 2019 10:58 GMT

(Clarifies deficit target)

By Luiza and Ilie

BUCHAREST, Feb 22 (Reuters) - Romanian President Klaus Iohannis said on Friday he would challenge the government's 2019 budget plan in the Constitutional Court, saying it was "unrealistic, over-valued and delayed" and also breached state legislation.

Romania's Social Democrat Party (PSD) approved a budget plan for 2019 earlier this month that raises spending on public-sector wages and pensions. It targets a fiscal deficit of 2.8 percent against an originally planned 2.6 percent.

But critics say the budget, which by law should have been approved by November, is based on unrealistic assumptions for economic growth. It projects growth of 5.5 percent, compared with a 3.8 percent forecast by the European Commission.

The budget has been hotly contested by municipal mayors and other state institutions, who said the funds they had been allotted were insufficient.

"Not only does this budget put the national economy in danger, it also has unconstitutional aspects," Iohannis told reporters, adding the bill also did not respect European Union member-state obligations.

Iohannis also criticised new taxes for banks, energy and telecoms firms introduced by emergency decree without impact assessment or public debate, as well as a separate decree altering judicial legislation.

The tax decree caused asset prices to fall to multi-year lows and hurt investment plans and monetary policy The judicial decree threatened magistrates' independence, raising concerns at the European Commission.

"Governing by PSD has failed," Iohannis said. "There are countless problems in hospitals. Education is under-financed. Romania is shocked, especially after the secretive decree ... the entire government has assaulted rule of law in Romania."

The head of the junior coalition party ALDE, Calin Tariceanu, said challenging the budget bill was unjustified and risked blocking government activity.

The Constitutional Court has yet to set a date to rule on the budget challenge. (Reporting by Luiza Ilie, editing by Larry King)

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