Fiscal Responsibility Law no

Fiscal Responsibility Law no. 69/2010

into force from 23 April 2010

Republished in the Official Gazette, Part I no. 330 from 14 May, 2015

CHAPTER I

General provisions

Article 1.

This law has as its main purposes:

1. Providing and maintaining fiscal discipline, transparency and medium and long term sustainability of the public finances;

2. Establishing a framework of principles and rules under which the Government ensures the implementation of fiscal and budgetary policies that provide for the sound administration of financial resources;

3. Ensuring efficient management of public finances to serve the long-term public interest, ensuring economic prosperity, and tying fiscal and budgetary policies within a sustainable framework.

Article 2.

The provisions of this law apply to the authorities, institutions and public and/or public utility entities provided in article 2 section 30 of Law no. 500/2002 on public finances, as amended and supplemented, and respectively article 2 section 39 of Law no. 273/2006 on local public finances, as amended and supplemented, financed under article 62 of Law no. 500/2002, with subsequent amendments, and article 67 of Law no. 273/2006, with subsequent amendments, and other entities included in the public administration according to the EU Regulation no. 549/2013 of the European Parliament and of the Council from 21 May 2013 regarding the European system of national and regional accounts in the European Union, published in the Official Journal of the European Union, L 174 of 26 June 2013.

Article 3.

For the purpose of this law, the following terms will be defined as:

1. Fiscal strategy - the public policy document that establishes the fiscal and budgetary objectives and priorities and sets the spending and revenue for the consolidated general budget and other budgets included in the consolidated budget, as well as the evolution of the budget balance over a period of three years;

2. Consolidated general budget –all budgets of the budgetary system including the state budget, the social security budget, special funds budgets, local budgets, state treasury budget, the budgets of autonomous public institutions, budgets of public institutions fully or partially funded from the state budget, from the social security budget and from the special funds budgets, the budgets of public institutions financed fully from own revenues, external loans budget contracted or guaranteed by the state and whose repayment, interest and other costs are ensured from public funds, grants, and budgets of other entities included in the public administration, which are adjusted, aggregated and consolidated according to EU Regulation 549/2013 in order to create a whole;

3. Fiscal and budgetary framework – a synthetic presentation of the main budgetary indicators, both in terms of revenue and of expenditures, including an aggregate description of the fiscal policy;

4. Public debt according to EU methodology – the debt of the public administration which is reported to the European Commission and published by Eurostat, expressed as percentage of GDP;

5. Primary expenditures of the general consolidated budget - consolidated general budget expenditures net of interest payments associated to the public debt;

6. Consolidated general budget balance - the difference between the revenues and expenditures of the consolidated general budget;

7. Consolidated general budget primary balance - the difference between primary revenues and expenditures of the consolidated general budget;

8. Deterioration of the consolidated general budget balance – an increase in the consolidated general budget deficit or decrease of the consolidated general budget surplus compared to those provided in the fiscal strategy for that year;

9. Annual structural balance of the public administration – the cyclically adjusted annual balance, net of extraordinary and temporary measures, calculated based on the methodology agreed in the European Union;

10. Medium-term budgetary objective – 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;

11. Public administration – institutional division, component of the national economy, defined in accordance with EU Regulation no. 549/2013;

12. Extraordinary circumstances – unusual event beyond the control of public administration authorities, which has a major influence on the financial position of the public administration, or periods of severe economic recession, as defined in the revised Stability and Growth Pact;

13. Stability and Growth Pact –a tool that ensures the budgetary discipline of the Member States in order to avoid excessive deficit according to EC Council Regulation no. 1466/1997 on the 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 revised and supplemented and EC Council Regulation no. 1467/1997 on speeding up and clarifying the implementation of the excessive deficit procedure, published in the Official Journal of the European Union, series L, no. 209 of 2 August 1997, as subsequently amended and supplemented;

14. Social security administrations – has the meaning provided by the EU Regulation no. 549/2013;

15. Economic cycle – defined and measured according to the methodologies accepted at the EU level;

16. Personnel expenditures – total expenditures incurred by the consolidated general budget during a financial year related to the public sector staff, namely expenditures with employment wages, military pay and the corresponding monthly allowances, benefits, allowances, bonuses, incentives, and other benefits of salary nature, either in cash or in kind, established under the law, and social contributions incumbent upon the employer and associated to the above;

17. Financial assistance from the European Union and other donors – non-reimbursable financial assistance received by Romania in the form of pre-accession and post-accession grants, pursuant to the provisions of the financing memoranda and agreements concluded between the European Community Commission or other donors and the Government of Romania;

18. Centralized budget of the administrative-territorial units – the revenues and expenditures of the general budgets of administrative-territorial units, as defined under article 3 paragraph (1) in Law no. 273/2006, as subsequently amended and supplemented;

19. Investment expenses - has the meaning provided by the Public Finance Law no. 500/2002, as subsequently revised and supplemented;

20. Fiscal expenditures – all provisions of the fiscal legislation, regulations or norms, the effect of which is to reduce the budget revenues or to delay the collection of budget revenues, applicable to certain categories of taxpayers, in respect to taxation standards established at general level. These may include exemptions, deductions and tax incentives, reduced tax rates, differentiated rules for the assessment of taxes, duties and contributions established for the purpose of a preferential treatment to certain categories of taxpayers, as well as any other tax regulations likely to reduce budget collections.

CHAPTER II

The Principles, Objectives and Rules of Fiscal and Budgetary Policies

Section 1

The Principles of Fiscal and Budgetary Policy

Article 4.

1. The Government will define and carry out its fiscal and budgetary policies based on the following principles:

(1) The principle of transparency regarding the setting of the budgetary targets and objectives and in carrying out its fiscal and budgetary policies,

The Government and the local authorities have the obligation to make public and maintain in public debate, for a reasonable period of time, all information necessary to allow the assessment of the implementation of fiscal and budgetary policies, the respective outcomes and the stance of central and local public finances.

(2) The principle of stability.

The Government has the obligation to carry out the fiscal and budgetary policy in a manner that will ensure medium-term predictability, consistent with the objective of maintaining macroeconomic stability.

(3) The principle of fiscal responsibility.

The Government has the obligation to carry out the fiscal and budgetary policy and to manage budgetary resources, obligations and fiscal risks in a manner that ensures sustainability of the fiscal position in the medium and long term. Sustainability of public finances means that, in the medium and long term, the Government should be able to manage financial risks or unforeseen events without having to introduce significant adjustments to expenditure, revenue or deficit with economic or social destabilizing effects.

(4) The principle of equity.

The Government will conduct its budgetary and fiscal policies taking into account the potential financial impact on future generations as well as the impact on medium and long term economic development.

(5) The principle of efficiency.

The fiscal and budgetary policies of Government will be based on achieving an efficient use of scarce public resources requiring that economic efficiency is considered in defining fiscal policies and that public investment decisions, including those related to EU funded initiatives or other donors, are based inter alia on an economic appraisal as well as the assessment of the capacity to absorb increased funding levels.

(6) The effective management of personnel spending.

The pay and employment policy regarding the institutions, authorities, public and/or public utility entities should be consistent with the fiscal and budgetary targets set out in the fiscal strategy, with the objective of achieving a more efficient fund management.

2. The principles presented in paragraph (1) are equally applicable to the local administrations and other entities financed from consolidated general budget.

Section 2

Objectives of Fiscal and Budgetary Policy

Article 5.

1. The Government shall pursue the fiscal and budgetary policy objectives, and formulate and execute the annual fiscal strategy in accordance with the fiscal rules specified in this law:

2. The objectives of fiscal policy are:

(a) Maintaining public debt at sustainable levels on medium and long term;

(b) Exercising prudent management of public sector assets, liabilities, and fiscal risks;

(d) Ensuring predictability in the level of tax rates and the tax base.

Section 3

Fiscal Rules

Article 6.

In order to comply with the reference values for budget deficit and public debt, as they are mentioned in the Protocol no. 12 on the Procedure Applicable to Excessive Deficits, attached to the Treaty on the Functioning of the European Union, the budgetary position of the public administration is either balanced or in surplus.

Article 7.

The rule provided under article 6 shall be considered complied if one of the following requirements is fulfilled:

(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.

Article 8.

1. Temporary deviation from the rules provided by article 7 and article 14 is allowed only due to extraordinary circumstances and provided that it does not endanger the medium-term fiscal and budgetary sustainability.

2. Following the periodical analysis of the macroeconomic situation, including the forecasts of the macroeconomic indicators, the Government makes a public announcement, if applicable, at the beginning of extraordinary circumstances, and requests the opinion of the Fiscal Council on the matter.

3. The Fiscal Council may directly notify the Government at the beginning of the extraordinary circumstances, presenting at the same time an economic analysis in support of this option.

4. After analyzing the opinion of the Fiscal Council, expressed according to the provisions of paragraph (2) and paragraph (3), the Government shall inform the Romanian Parliament and the European Commission, if applicable, at the beginning of the extraordinary circumstances and on the application of the provisions of paragraph (1).

5. Following a periodical analysis of the macroeconomic situation, including the forecasts of the macroeconomic indicators, the Government makes a public announcement, if applicable, regarding the end of the extraordinary circumstances and requests the opinion of the Fiscal Council on the matter.

6. The Fiscal Council may directly notify the Government at the end of the extraordinary circumstances, presenting at the same time an economic analysis in support of this option.

7. After analyzing the opinion of the Fiscal Council expressed according to the provisions of paragraph (5) and (6), the Government will inform the Romanian Parliament and the European Commission, if applicable, at the end of the extraordinary circumstances and on resuming the application of the rules provided by article 7 and 14.

8. After the end of each situation of extraordinary circumstances, the corrective measures of the deviation applied according to the provisions of article 14 lead to an improvement of the structural balance of the consolidated general budget at least equal to the requirements of the Stability and Growth Pact.

9. If the Government does not agree with the opinions issued by the Fiscal Council issued for the purposes of applying the provisions of articles 6-9 and article 14, it shall publicly explain the divergence of opinion.

Article 9.

The public debt according to the EU methodology will not exceed 60% of GDP.

Article 10.

If the ratio between the public debt according to the EU methodology and the GDP exceeds the reference value of 60% of GDP, mentioned under article 1 in Protocol no. 12 on the Procedure Applicable to Excessive Deficits attached to the European Union treaties, the public debt will be reduced by an average rate of 5 percent per year as reference rate, as provided by article 2 in Regulation (EC) no. 1467/97, modified through Council Regulation (EU) no. 1177/2011 of 8 November 2011, published in the Official Journal of the European Union, L 306 of 23 November 2011.

Article 11.

In order to improve the coordination of the planning regarding the public debt reduction at the European Union level, the Ministry of Public Finance sends ex ante to the European Commission reports on the plan regarding the decline of the public debt.

Article 12.

The fiscal policy shall be conducted in compliance with the following fiscal rules:

(a) The general consolidated budget balance and personnel expenditure of the general consolidated budget, expressed as a percentage of GDP, may not exceed the annual ceilings established in the fiscal framework of the fiscal strategy for the next 2 years;

(b) The balance and the primary balance of the consolidated general budget, taking into account its components, for the next budgetary year, may not exceed the ceiling established within the fiscal framework from the fiscal strategy approved by the Parliament;

(c) Total expenditure of the consolidated general budget, excluding financial assistance from the European Union and other donors and personnel expenditures, taking into account the state budget, social budgets, local budgets, self-financed institutions budgets, special funds budgets, and other component budgets shall not exceed the ceiling specified in the fiscal framework from the fiscal strategy for the next budgetary year;

(d) The annual increase of public administration expenditures complies with the provisions of EC Council Regulations no. 1466/97, as subsequently amended and supplemented;

(e) During a financial year, the approved budgetary allocations or commitments for investment expenditures that are not used cannot be transferred and used for current expenditures;

(f) By exception from the provisions of letter g), during the financial year transfers of budgetary allocations or commitments approved and not used for investment expenditures can be made, if these transfers are made to ensure the funds necessary for projects financed from external pre-accession/post-accession non-reimbursable funds and from reimbursable funds or when they are made in the structure of these projects, and only within the limit of 20% of the credits approved for investment expenditures;

(g)If the positive budget balance for that year and for the next 2 years will be higher than the forecasted one, the difference will be used to reduce the public debt accumulated in previous years.

Article 13.

Limits for the public debt calculated according to the EU methodology:

1. If the public debt exceeds 45% of GDP, but is below 50% of GDP, the Ministry of Public Finance presents to the Government a justification report for the debt increase and proposals for the maintenance of this indicator at a sustainable level;

2. If the public debt exceeds 50% of GDP, but is below 55% of GDP:

(a) The Government publicly presents and implements as soon as possible a program for reduction of public debt as share of GDP;

(b) The program provided under letter (a) comprises, but are not limited to, measures meant to freeze the total expenditures for public wages;

(c) The measures comprised in the program provided under letter (a) shall be applied through the approval of a legislative act at the law level so as to ensure their applicability in the shortest time, at the latest the next semester following the one in which the public debt percentage is found to be exceeded.

3. If public debt exceeds 55% of the GDP, but is below 60% of the GDP:

(a) The provisions of paragraph (2) shall apply;

(b) The Government takes measures in order to freeze the total social assistance expenditures of the public system;

(c) The measures provided under letter (b) shall be applied through the approval of a legislative act at the law level so as to ensure their applicability in the shortest time, at the latest the next semester following the one in which the public debt percentage is found to be exceeded.

4. If public debt exceeds 60% of the GDP:

(a) The provisions of paragraph (3) shall apply;

(b) The Government establishes and implements a program to decrease the public debt according to the provisions of article 10;

(c) The measures comprised in the program provided under letter (b) shall be applied through the approval of legislative acts at the law level, identifying urgent measures meant to decrease the budget deficit and the public debt, at the latest the next semester following the one in which the public debt percentage is found to be exceeded.

5. The provisions under paragraph (2), (3) and (4) letter (a) shall not apply in case of extraordinary circumstances if this does not endanger the medium and long-term sustainability of the public debt.

Section 4

Correction Mechanism

Article 14.

1. In case of divergence from the medium-term budgetary objective or the adjustment path towards it, the Government approves or, as applicable, sends to the Parliament for approval a set of measures meant to correct this divergence.

2. In applying this article, a divergence from the medium-term budgetary objective has the meaning provided under article 6 in the EC Council Regulations no. 1466/1997, as subsequently amended and supplemented.

3. The corrective measures for the divergence will be formulated in quantifiable terms, broken down on years and will produce effects, at the latest, during the following financial year.

4. The corrective measures for the divergence shall be proportional to the size of the divergence.

5. The corrective measures for the divergence shall be implemented with priority for those budgets or entities of the public administration that caused the divergence.

6. The corrective measures for the divergence shall ensure the implementation of the recommendations addressed to Romania by the institutions of the European Union, as well as a correction pace established in accordance with the Stability and Growth Pact.

7. The divergence from the medium-term budgetary objective or the adjustment path towards it can be ascertained by any of the following means:

(a) Based on the documents issued by the EU institutions in the setting of the budgetary surveillance process;

(b) At the Government’s initiative, in which case it requests the opinion of the Fiscal Council.

8. The Fiscal Council issues opinions on the corrective measures for the divergence, as well as on the implementation of these measures.

9. The Government informs the commissions for budget, finance, and banks of the Parliament on the divergence, as well as on the corrective measures.

Chapter III

Budgetary Expenditures

Section 1

Expenditure Impact Assessment

Article 15.

1. The proponents of new legislative measures/policies/initiatives that involve an increase of public spending are required to provide:

(a) A financial statement referred to in article 15 of Law no. 500/2002, amended and supplemented, together with the assumptions and calculation methodology used.

(b) A statement that the proposed increase in spending complies with the strategic objectives and priorities specified in the fiscal strategy and with the annual budget and the expenditure ceilings specified in the fiscal strategy.

2. The Ministry of Public Finance is required to verify the financial sheet provided under paragraph (1). In doing so, the Ministry of Public Finance may request the opinion of the Fiscal Council.

Section 2

Personnel Expenditure

Article 16.

The Government, the line credit officers and any entity responsible for public service pay policies and wage agreements must ensure that such policies and agreements comply with the objectives of fiscal responsibility, the fiscal rules and the objectives and ceilings established under the fiscal strategy.

Article 17.

1. The introduction of any legislative act that leads to increased personnel or pension expenditure is forbidden within 180 days prior to Governmental mandate expiration, in accordance with article 110, paragraph (1) of the Romanian Constitution, republished;

2. Total personnel expenditures cannot be increased during the budget year or during the budget revision;

3. Collective public service pay negotiations shall not be concluded until the fiscal strategy has been approved, and respecting the determined personnel expenditure ceiling.

Article 18.

1. The execution of personnel expenditures will be assessed by the Ministry of Public Finance at the end of each quarter against the quarterly expenditure allocations specified under article 37, paragraph 4.

2. In order to comply with the quarterly personnel expenditures allocations, the line credit officers from state government and local governments will have the authority to reduce other pay established by law in variable amount and/or those which are granted on an optional (discretionary) basis, according to the law.

3. In exceptional and duly justified cases, the Ministry of Public Finance may approve an increase to the quarterly allocations for personnel expenditures, condition that the institution requesting such an increase provides proof on the compliance with paragraph (2) and with the annual approved budget for this destination.

4. Central and local government institutions in the situation referred to in paragraph (3) are required, during the quarter following the quarter for which the allocation for personnel expenditures was increased, to make savings on personnel spending to the amount by which the allocation was increased in the previous quarter.

5. Central and local government institutions are required to take all necessary measures to meet the provisions of paragraph (4) and the quarterly total expenditure targets, including by reducing the number of financed positions and their budgets, and, respectively, by laying off a part of staff, in accordance with the legal provisions.

6. Until the requirements stipulated in paragraph (4) are fulfilled, a central and local government institution for which the quarterly allocation was increased will be forbidden:

(a) To grant any awards or overtime pay;

(b) To sanction the promotion of employees, if this would imply an increase in personnel expenditure;

Chapter IV

Budgetary Revenues

Article 19.

The revision of budget revenues forecasts underlying the fiscal strategy or the annual budget during the debate of the Budget Law is not permitted, unless it has the agreement of the Government and it is endorsed by the Fiscal Council.

Article 20.

1. Within 30 days after publication of the Budget Law and the social insurance budget law, the Ministry of Public Finance will elaborate and publish the annual program for revenue collection, broken down for state budget, social budgets and the budgets of the special funds showing:

(a) Quarterly targets for revenue collections, detailed for each type of income;

(b) Quarterly targets for the recovery of tax arrears;

2. Within 30 days after publication of Budget Law, the Ministry of Public Finance will also publish the annual forecast for revenue collection for local budgets, self-financed institutions budgets, and other budgets in the consolidated general budget that are not mentioned in paragraph (1), showing quarterly forecasts for revenue collections for each tax source and quarterly forecasts of the recovery of tax arrears and legislation proposals that lead to improving revenue collection and streamline local budgets, self-financing institutions budgets and other component budgets of the consolidated general budget.

Article 21.

Proposals for any legislation leading to a reduction of budgetary revenues must provide a financial statement according to article 15 of Law no. 500/2002, as amended and supplemented and meet at least one of the following conditions:

(a) To have the endorsement of the Ministry of Public Finance and of the Fiscal Council, confirming that the financial impact was taken into account in the budgetary revenue forecast and does not affect the annual budget targets and medium term targets;

(b) To be accompanied by proposals for measures to compensate the financial impact, by increasing other budgetary revenues.

Article 22.

The initiatives promoted under article 21 are adopted concurrently with the proposed compensating measures, approved by the Government.

Chapter V

Rules on the Supplementary Budgets

Article 23.

1. Any supplementary state budget, social budget and special funds budgets, as well as the utilization of the amounts withheld in accordance with article 21 paragraph (5) of Law no. 500/2002 shall take into consideration the conclusions of the published half-yearly report on the economic and budgetary situation, and be supported by the recommendation of the Fiscal Council.

2. Not more than two supplementary budgets may be approved in any financial year, and no supplementary budget may be sent to Parliament during the first six months of the financial year.

3. By exception from the provisions under paragraph (1) and paragraph (2), in case of significant worsening of the forecasted macroeconomic indicators underlying the budgetary law, one budgetary rectification may be promoted in the first six months of the year.

Article 24.

The total expenditure of the consolidated general budget, excluding the financial assistance from the EU, shall not be increased during budgetary revisions, except for the payment of debt service or Romania’s contribution to the EU budget.

Article 25.

If the half-yearly report on the economic and budgetary situation, finds that the forecast for the consolidated general budget balance deteriorates by more than 0.5% of GDP compared with the forecast contained in the Annual Budget, and such deterioration is not the result of the worsening of the macroeconomic framework, the Government is required to implement necessary measures in order to reach the target for the consolidated general budget balance.

Chapter VI

Fiscal Strategy

Article 26.

1. The Government shall, upon the proposal of the Ministry of Public Finance, not later than the 31st of July of each year, approve its fiscal strategy for the next three years, which shall contain the macroeconomic framework underlying the budgetary and fiscal policy, a fiscal framework with fiscal forecasts and fiscal policy, and a statement of responsibility, as specified in this law, and will present it to Parliament before 15th August of each year.

2. With the fiscal-budgetary strategy provided in paragraph (1), the Government will submit the draft law for approving the ceilings specified in the fiscal framework as described in article 29 paragraph (1), included in the fiscal and budgetary strategy.

3. The draft law for approval ceilings specified in the fiscal framework also includes the medium-term budgetary objective, as well as the adjustment path towards it.

4. The ceilings for the total balance and personnel spending of the general consolidated budget specified in article 29 paragraph (1) sub-paragraphs (a) and (c), approved by the Parliament, are binding for the next two budget years.

5. The ceilings described in article 29, paragraph (1) in sub-paragraphs (d)-(i), approved by Parliament, are binding for the forthcoming budget year.

Article 27.

The macroeconomic framework uses the latest information and represents the most likely macro-fiscal scenario or a more prudent scenario.

Article 28.

The macroeconomic framework shall contain information on the macroeconomic situation and forecasts for:

(1) The current budget year and three further years and actual outturns for the two previous budget years:

(a) GDP and its components;

(b) consumer prices and GDP deflator;

(d) current account position of the balance of payments;

(e) assumptions underpinning the forecasts;

(f) a statement regarding the consistency or the differences with the most recent updated forecasts of the European Commission. The significant differences between the chosen macro-fiscal scenario and the forecasts of the European Commission are described and justified, especially if the level or growth of variables in external assumptions departs significantly from the values specified in the Commission’s forecasts.

(2) The medium term macroeconomic forecasts affecting fiscal policy.

Article 29.

(1) The fiscal framework contains ceilings for the forthcoming budget year and two further years, estimated actual results for the current budget year, and actual results for the two previous budget years covering:

(a) The total balance of the general consolidated budget as a percent of GDP;

(b) The annual structural balance of the public administration expressed as a percentage of GDP;

(d)The ceilings on reimbursable funding that can be contracted, as well as the withdrawals of reimbursable funding contracted or that will be contracted by the administrative-territorial units;

(e) The ceilings on the issuance of guarantees by the Government through the Ministry of Public Finance, and by the administrative-territorial units;

(f) The public debt, calculated according to the European Union methodology;

(g)The nominal level of aggregate and personnel expenditures for the consolidated general budget, state budget, social budgets, local budgets, self-financed institutions budgets, each special funds budget, and other budget specified in the consolidated general budget, excluding financial support from the European Union and other donors;

(h)The nominal balance of the consolidated general budget; state budget, social budgets; special funds budgets, and other components of the consolidated general budget;

(i)The primary balance of the consolidated general budget.

(2) The fiscal framework from the fiscal strategy shall also contain:

(a) Updated forecasts for the current budget year and three further years and actual results for the two previous budget years for the consolidated general budget and other budgets specified in the consolidated general budget with respect to:

(i) level of budgetary revenues by classification of the main categories of revenues;

(ii) level of budgetary expenditures by economic and functional classifications;

(iii) capital expenditures;

(iv) level of debt according to the EU methodology;

(v) the government guarantees granted according to national laws;

(vi) any other information that the Ministry of Public Finance considers important for the fiscal strategy;

(vii) key assumptions on which the above numbers are based;

(viii) a sensitivity analysis of fiscal targets to the changes in macroeconomic conditions, as well as the sensitivity analysis of public debt and interests expenditure, based on different assumptions regarding economic growth and interest rates.

(b) An explanation of the fiscal policies in relation to fiscal responsibility principles and fiscal rules, and any temporary measures to be implemented to ensure compliance;

(i) the revenue policy, including planned changes to taxes and policies affecting other revenues;

(ii) the deficit and debt policy, including an analysis of debt sustainability;

(iii) the expenditure policy, including expenditure priorities, aggregate expenditure intentions, including for the consolidated budget and other budgets; and expenditure ceilings and other targets or limits implied by or required by the fiscal rules.

(d) A fiscal risk statement, including, any commitments and contingent liabilities not included in the fiscal forecasts, and all other circumstances which may have a material effect on the fiscal and economic forecasts and which have not already been incorporated into the fiscal forecasts, as well as information on the losses and outstanding payments of the SOEs;

(e) An analysis of the consistency of the updated fiscal strategy with the previous fiscal strategy, providing an explanation of significant changes.

(3) The medium-term expenditure framework. The fiscal strategy shall set out an aggregated level of the Government’s spending plans for the forthcoming budget year, the two subsequent years, estimated actual results for the current year, and actual results for the two previous years containing:

(a) Expenditure priorities and their rationale, including an explanation of how the Government intends to improve policy, the efficiency and effectiveness of service delivery, the quality of its regulatory activities, and its initiatives to reduce barriers to business and encourage private sector growth in various sectors;

(b) State budget expenditures, detailed on first 10 primary spending authorities of the state budget, in decreasing order, established by the Government, the expenditures of other components of the consolidated general budget and the total expenditure estimates of the centralized administrative-territorials units budget;

(c) The Government’s prioritized public investment projects proposed for financing over the 3-year interval covered by the fiscal strategy.

(4) Statement of responsibility. The fiscal strategy shall contain a statement of responsibility signed by the Prime Minister and the Minister for Finance attesting to the reliability and completeness of the information in the fiscal strategy and its compliance with this law, targets or limits for fiscal rules and compliance principles of fiscal responsibility.

Chapter VII

Annual Budget

Article 30.

1. Each primary spending authority must propose an annual budget draft that complies with the fiscal strategy and with the budget instructions from the Ministry of Public Finance, including expenditure ceilings and numbers of approved personnel positions.

2. Pre-allocating a specific level of funding to a ministry or sector shall not be permitted. Allocations of budget funding for a ministry or sector can only be made through the annual budget process.

3. The Ministry of Public Finance shall have the power to reject all budget bids including spending proposals presented by a primary spending authority of the central administration in the annual budget process that do not comply with the fiscal strategy and budget instructions. If the spending authority fails to bring the budget bid into compliance within the time specified by the Ministry of Public Finance, then the Ministry of Public Finance, after discussions with primary spending authorities under the mediation of the Prime Minister, shall have the power to unilaterally adjust the budget bid for inclusion in the annual budget.

4. The Government shall present an annual budget to Parliament that is consistent with the fiscal responsibility principles, the fiscal rules, the fiscal strategy and other requirements in this law and the Prime Minister and Minister of Public Finance shall sign a statement attesting to such consistency which shall be presented to Parliament with the Annual Budget.

5. If the Government is unable to comply with the requirement for consistency specified in paragraph (4) then the Prime Minister and Minister of Public Finance shall provide in the statement explanations for the deviations which shall be presented to Parliament with the Annual Budget and such statement shall include the proposals and timing for the Government to comply with the fiscal responsibility principles, the fiscal rules, the fiscal strategy and other requirements in this law.

6. The Fiscal Council shall provide an opinion on the statement specified in paragraph (4), including the entries specified in paragraph (5).

Article 31.

1. The annual state budget law and state social insurance budget must be consistent with the fiscal strategy and with the provisions of this law and will present:

(a) The fiscal targets for the forthcoming budget year and the two following years, in nominal terms and expressed as a share of GDP, for the consolidated general budget balance, the primary consolidated general budget balance, revenue and total expenditure, primary expenditure of the consolidated general budget;

(b) Public debt information and government guarantees according to EU methodology;

(c) Information on how the targets were set, including the presentation of the methodology used for calculating and comparing with their execution in the last two years;

(d) Presentation of the financial impact of legislative changes, as well as the presentation of measures to compensate it.

Article 32.

The report that accompanies the state budget law includes detailed information regarding the impact of expenditures on the budgetary revenues.

Chapter VIII

ESCAPE CLAUSES

Article 33.

The fiscal framework section of the fiscal strategy referred to in article 29, paragraph (1), may be revised under the following circumstances:

(a) Change in the coverage of the general consolidated budget, in which case the reasons have to be explained, and the data and information stipulated by article 29, paragraph (1) have to be provided in a format comparable to the new coverage of the consolidated general budget;

(b) A significant worsening of the macroeconomic indicators that were used in preparing the fiscal strategy;

(c) Change of government: at the beginning of a new mandate, the Government will make public, whether its program complies with the latest fiscal strategy and other budget documents approved by Parliament; otherwise the Ministry of Public Finance will prepare a new draft fiscal strategy.

Article 34.

In case of statistical revisions of GDP, there are allowed deviations from rules referred to in article 12 letter (a), article 26 paragraph (4) and article 29 paragraph (1) letter (f).

Article 35.

1. During the discussion of the fiscal strategy under the provisions of article 26, paragraph (1), the annual budget, and any other budget document, no changes shall be made by Parliament which would result in a deterioration in the level of the general consolidated budget balance set out in the previous fiscal strategy, increase in expenditure and debt ceilings, and other changes inconsistent with fiscal responsibility objectives and fiscal rules.

2. The Parliament may return the Fiscal Strategy to the government with its comments and reconsideration. In such a situation, the government will address within 15 days’ comments in consultation with the Fiscal Council and submit a revised Fiscal Strategy to the Parliament for approval. If Parliament is not still satisfied and willing to approve the fiscal strategy, the Prime Minister in agreement with the Fiscal Council will take a final view on the fiscal framework and ceilings, while considering the comments, if any, made by the Parliament, and accordingly direct the Ministry of Public Finance to initiate the process of budget formulation.

Article 36.

1. The revision of the fiscal strategy can be done only by the Parliament upon Government’s request, except for the situation provided in article 33, sub-paragraph (a) for which only the approval of the Government is required.

2. The revision of the fiscal strategy, the annual budget, or any other budget document, is subject to review and opinion from the Fiscal Council.

3. The revised version of the fiscal strategy, should contain a section detailing and explaining differences from the version previously approved by Parliament.

Chapter IX

Transparency of Fiscal and Budgetary Policy

Section 1

Budget Execution and Monitoring of Fiscal Targets

Article 37.

1. Within 45 days after publication of the budget law, the Ministry of Public Finance will publish on its website a quarterly schedule of expenditures of the state budget, social budgets, and each special funds budget by economic classification based on the quarterly collection targets for budgetary revenues.

2. Within 55 days after publication of the Budget Law, the Ministry of Public Finance will publish on its website a quarterly schedule of expenditures of Local Budgets, Self-Financed Institutions Budgets, and other budgets in the consolidated general budget by economic classification.

3. For this purpose, central government institutions will submit to the Ministry of Public Finance their proposals on the quarterly schedule of expenditures, within 15 days of the publication of the Budget Law. The deadline for other entities is 45 days of the publication of the Budget Law.

4. Based on quarterly schedule of expenditures and the quarterly collection targets for budgetary revenues, the Ministry of Public Finance will approve and publish quarterly expenditure, revenue and consolidated general budget balance targets, as well as quarterly personnel expenditure targets for each central government institutions financed from the state budget and the social security budgets.

Article 38.

1. The Ministry of Public Finance publishes on its website cash-based budgetary data or equivalent data from public accounting if the cash-based data are not available, at least with the following frequency:

- monthly and before the end of the following month for the central administration, the state administration and the sub-sectors of the social security administrations;

- quarterly and before the end of the following quarter, for the sub-sector of the local administration.

2. The Ministry of Public Finance publishes on its website the data related to public debt according to EU methodology, with the following frequency:

- monthly and before the end of the following month, for public debt corresponding to the sub-sectors of the central public administration and the sub-sectors of the social insurance funds system;

- quarterly and before the end of the following quarter for the public debt according to the EU methodology corresponding to the sub-sector of the local public administration.

Article 39.

The Ministry of Public Finance publishes on its own webpage for all the sub-sectors of the public administration relevant information regarding the contingent debt with major potential impact on the public budgets, including information related to state securities, non-performing loans and liabilities resulting from the functioning of the public institutions, including the amount of the liabilities. Also, the Ministry of Public Finance publishes on its own webpage information related to the shares of the public administration in the capital of commercial companies as established by the Law no. 31/1990, republished, as amended and supplemented, and national companies.

Article 40.

Until the end of April, July and October of each year, the Government will present a public evaluation of the quarterly budget execution and the performance against the quarterly targets mentioned in article 37, paragraph (4). In case of slippages from the targets, the Government will present measures envisaged for corrections (spending reductions or revenue increasing measures).

Article 41.

Both the evaluations of the quarterly budget execution and the measures envisaged to correct slippages will be subject to analysis and evaluation by the Fiscal Council.

Section 2

The Half-Yearly Report on the Economic and Budgetary Situation

Article 42.

By the end of July of each year, the Ministry of Public Finance will publish on its website a half-yearly report on the economic and budgetary situation.

Article 43.

The half-yearly report on the economic situation and budget will include, without being limited to, the following:

(a) A review of the macroeconomic framework and the latest data on macroeconomic indicators identifying significant trends and changes since the annual budget law was finalized;

(b) An assessment of the impact on the fiscal targets of any changes in the macroeconomic framework and presentation of necessary measures to be taken to correct such impacts;

(c) Data on the consolidated general budget revenues, detailed for each category of revenue, indicating the initial forecast, revenues collected in the first six months and an updated forecast for the entire year;

(d) Data on the consolidated general budget expenditures, detailed by economic and functional classification for each constituent budget of the consolidated general budget, indicating the approved expenditure, the expenditures incurred in the first six months and an updated forecast for the entire year;

(e) Data on the state budget expenditure, detailed in economic classification for each central government institution, indicating the approved expenditure, the expenditures incurred in the first six months and an updated forecast for the entire year;

(f) Data on the budgetary balance for both the consolidated general budget (total and primary) and for each budget of the consolidated general budget, indicating the approved program, the result achieved in the first six months and an updated forecast for the entire year.

(g) Data on the absorption of European funds, indicating the approved program, the results achieved in the first six months and an updated forecast for the entire year;

(h) Data on outstanding expenditure payments for the end of Q1 and forecast for half-year, including arrears and floating debt, for each constituent budget in the consolidated general budget;

(i) Data on government debt and financing of the budget deficit;

(j) Explanation for any failure to collect the forecasted revenues, indicating the measures taken and planned to improve the collection.

Article 44.

1. The information contained in the half-yearly report on economic and fiscal situation must take into account, to the extent possible, any Government decisions and other developments, which may have an effect on fiscal and economic prospects of the year.

2. Data and information contained in the half-yearly report on the economic situation and budget must be presented in a format comparable to those in the annual budget and in the fiscal strategy.

Section 3

Report on the Final Budget Execution

Article 45.

No later than 5 months from the end of the financial year, the Ministry of Public Finance will publish on its website a report on the final budget execution, which will include:

(a) Information on the results of the budgetary policy in the previous year and a comparison of those results both with the strategic objectives and priorities in the fiscal strategy, and the fiscal targets in the annual budget law and in the fiscal strategy;

(b) Analyze how the Government has respected the principles and rules stipulated in this Law and to explain any deviations from these;

(c) Assess if the fiscal and budgetary policies in the completed budget year and its results were in line with the medium-term objective stipulated in the fiscal strategy;

(d) Explain any deviations from the Government’s medium-term objectives and how these are to be addressed.

Article 46.

The report on budget execution will include the final execution data for the indicators provided in article 29, paragraph (1), and a section that shows deviations from the fiscal strategy and from the initial annual budget, with justification for such deviations.

Article 47.

The report on budget execution will include a detailed reconciliation table of the budget and public debt indicators, which indicates the methodology of transition from the public accounting-based data and the data based on the EU standards.

Section 4

Pre-election Economic and Fiscal Situation and Outlook Report

Article 48.

At least 60 days before parliamentary elections, the Government will publish a report on the economic and budgetary situation and outlook.

Article 49.

The Pre-Election Economic and Fiscal Situation and Outlook Report must contain the following information:

(a) The estimated revenues, expenditures and budgetary balance for the current financial year, detailed by economic classification and by constituent budget include in the consolidated general budget;

(b) The forecast of macroeconomic indicators and other economic assumptions underlying the estimates provided in sub-paragraph (a);

(c) An analysis of the risks, quantified where possible, which may have an effect on the budgetary outlook, including any commitments of the Government which are not included in the existing fiscal forecasts as well as information on the losses and outstanding payments of the SOEs;

(d) A statement signed by the Prime Minister and Minister of Public Finance, certifying that the information contained in the report: reflects the best estimates at that time and that these have been prepared in a realistic manner; reflects all available information on the economic and fiscal outlook; reflects all the information communicated by the ministers responsible and complies with the provisions of article 50.

Article 50.

The information contained in report from article 49 shall consider all Government decisions and all other known situations that may have an effect on fiscal and economic prospects.

Section 5

The Financial Impact of Electoral Commitments

Article 51.

1. With 60 days before the general elections the leaders of political parties may ask the Prime Minister or the Fiscal Council, to calculate the financial impact of any proposed policies that have been announced publicly.

2. Such a request must be expressed in writing and describe in detail the proposed policy, providing, where relevant, the details necessary to determine the financial impact.

3. The request of the Prime Minister shall be sent directly to the Ministry of Public Finance, responsible ministries or to the Fiscal Council.

4. The Minister of Finance or the ministers concerned do not have the obligation to respond to the requests formulated by the leaders of political parties if they were not sent through the Prime Minister.

Article 52.

1. Within 30 days after such request has been made, the Minister of Public Finance or the minister concerned, or the President of the Fiscal Council will make public the financial impact of the policy concerned together with the assumptions used and methodology used.

2. The Minister of Public Finance, or the minister concerned, or the President of the Fiscal Council will make public if insufficient information or time was available to prepare and publish the requested financial impact analysis.

Chapter X

THE FISCAL COUNCIL

Section 1

Responsibilities

Article 53.

1. The Fiscal Council is an independent authority, composed of five members with experience in macroeconomic and budgetary policies that will support the work of Government and Parliament in the process of elaboration and development of fiscal and budgetary policies to ensure the quality of macroeconomic and budgetary mid and long term forecasts underlying such policies. Fiscal Council members will exercise their mandate under the law and will not seek or receive instructions from public authorities or from any other institution or authority.

2. The main tasks of The Fiscal Council are:

(a) Analysis and issuing opinions and recommendations on official macroeconomic and budgetary forecasts;

(b) To monitor the compliance and enforcement of fiscal rules stipulated under this law, including those related to the correction mechanism and extraordinary circumstances;

(c) Analysis and issuing opinions and recommendations on the fiscal strategy and assessing its compliance with the principles and rules specified in this law;

(d) Assessment of the budgetary performance of the Government against the fiscal targets and policies specified in the fiscal strategy and the compliance of such policies with the principles and rules specified in this law, through:

(a.i.1.a.i) analyzing and issuing opinions and recommendations on the quarterly reports on budget implementation, prepared by the Government, the achievement of the quarterly targets and the measures envisaged by the Government to correct any slippages;

(a.i.1.a.ii) analyzing and issuing opinions and recommendations on the half-yearly report on the economic and budget situation;

(a.i.1.a.iii) analyzing and issuing opinions and recommendations on the end of year report on the economic and budget situation;

(a.i.1.a.iv) analyzing and issuing opinions and recommendations on the Pre election Economic Situation and Fiscal Outlook Report;

(e) Analysis and issuing opinions and recommendations on the annual budget laws before approval by the Government and before submission to Parliament, on the supplementary budgets and other legislative initiatives that may have an impact on the budgetary targets, as well as assessing their compliance with the principles and rules specified in this Law;

(f) Preparation of cost estimates and issuing opinions on the budgetary impact of the normative ordinances, other than the ones mentioned on (d) and the amendments made on the annual budget law during the parliamentary debates;

(g) Provision of information, upon request, to the President, the parliamentary commissioners, the President of the State Audit Office, the Governor of the National Bank of Romania and the committees of Parliament concerning issues within their competence;

(h) Provision of information and advice to the Government and Parliament concerning legislative recommendations for the maintaining fiscal discipline and the transparency of the fiscal and budgetary policies;

i) carry out an ex post evaluation, starting with the 2024 budget, of the analysis of expenditures carried out by the Ministry of Finance and the main credit authorities according to the multi-year strategy provided for in art. 311 para. (3) lit. a) from Law no. 500/2002, with subsequent amendments and additions. In order to fulfill this new attribution, the Fiscal Council will be provided with all the necessary resources.

3. The opinions, forecasts, analysis and recommendations of the Fiscal Council will be published on its website.

4. The opinions and recommendations of the Fiscal Council will be considered by the Government and the Parliament when elaborating and approving the fiscal strategy and the annual budgets, as well as in the preparation of other measures triggered by the implementation of this law.

5. If the Fiscal Council notes, according to article 61 paragraph (2), persistent deviations in the same direction of macroeconomic forecasts compared to actual data, which were recorded over a period of at least 4 consecutive years, the Government shall take the necessary measures and make them public.

Article 54.

1. The Fiscal Council may request from any organization, information, documents or data relevant to fulfill their duties and responsibilities stipulated by this law.

2. Fiscal Council may request information, documents or data necessary to fulfill its duties and responsibilities, in any format or level of detail, from the entity managing such data or responsible of producing it. The entity shall comply with such request within fifteen days of its receipt.

3. If the information requested is not available or cannot be transmitted in the period stipulated in paragraph (2) above, the entity shall inform the Fiscal Council in writing to that effect.

4. If the entity obliged to release the data to the Fiscal Council fails to do so within the period provided in paragraph (2) above, the Fiscal Council may request the data from the Minister of Public Finance. The Ministry of Public Finance will release the data within seven working days of receipt of such request, or inform the Fiscal Council about the unavailability of the data.

5. If the entity obliged to release data to the Fiscal Council fails to do so within the time limits specified in paragraphs (2) and (4), the Fiscal Council shall publish such fact.

6. The Fiscal Council requests to the entity that has the obligation to provide the required data can be made as a document with electronic signature, where there is an agreement to that effect.

7. No person acting on behalf of the entities obliged to provide information to the Fiscal Council will be disadvantaged because of providing the Fiscal Council data necessary to fulfill its duties and responsibilities under the condition that the rules on treatment of confidential information provided on paragraph (2) have been observed.

Section 2

Membership of the Fiscal Council

Article 55.

1. The Fiscal Council will be appointed following the acceptance by the Parliament for a period of nine years. Members of the Fiscal Council may not be re-elected after the completion of the mandate. If the mandate of a member of the Fiscal Council stopped after a period of three years, the respective member may be re-elected once.

2. The Romanian Academy, the National Bank of Romania, the Bucharest University of Economic Studies, the Romanian Banking Institute and the Romanian Banks Association will each nominate one person to be a member of the Fiscal Council.

3. The Persons nominated to be part of the Fiscal Council will be heard by the Budget Committees of the Romanian Parliament and decided by a majority vote of MPs and Senators. In case the persons nominated do not meet the necessary votes, the entities under paragraph (2) will submit other nominees within fifteen days.

4. Persons nominated to be part of the Fiscal Council should be Romanian citizens, have a clean criminal record, hold a university degree, have extensive professional experience in economic, budgetary or financial matters, and an outstanding reputation in such matters of at least ten years.

5. No person shall be nominated member of the Fiscal Council who:

(a) Within the four years prior to nomination held a position in government or a similar function;

(b) Within the four years prior to nomination was a member of the Romanian Parliament, the European Parliament or held a senior official position in a political party;

(c) Is a close relative (husband or wife, parent, child, brother or sister or other relatives up to grade II) to a person holding a position in government or a similar function, or being member of the Romanian Parliament or the European Parliament or holding a senior official position in a political party.

6. A member of the Fiscal Council:

(a) Shall not accept a position in government or a similar function and shall not become members of the Romanian Parliament or the European Parliament or accept a senior official position in a political party;

(b) Shall not have a close relative, as defined above, holding a position in government or a similar function, or being member of the Romanian Parliament or the European Parliament or hold a senior official position in a political party;

(d) Shall not be senior officials or members of Supervisory Boards of companies in majority state ownership.

7. Fiscal Council Members are required to immediately notify in writing the budget committees of the Parliament the occurrence of any incompatibility specified in paragraph (6), and take the necessary measures to cease the state of incompatibility within 10 days of its occurrence.

8. If the member of the Fiscal Council fails to fulfill his obligation laid down in paragraph (7) within the required timeframe, the budget committees of the Parliament shall establish incompatibility in a resolution.

9. If the member of the Fiscal Council terminates the grounds of incompatibility during the incompatibility proceedings, and provides proof thereof, incompatibility shall not be established.

10. If a member of the Fiscal Council terminates his mandate before the deadline stipulated in paragraph (1), the corresponding entity as mentioned in paragraph (2) will nominate to the budget committees of the Parliament, within 15 days, a new person for the remaining term of office.

Article 56.

1. The President and the vice-president of the Fiscal Council will be elected through vote by the members:

2. The President of the Fiscal Council shall:

(a) Act as Chairman of the Fiscal Council;

(b) Convene the meetings of the Fiscal Council;

(d) Approve publication of the analysis, studies, opinions and recommendations prepared by the Fiscal Council, upon their approval by the members of the Fiscal Council through majority vote;

(e) Coordinate the secretariat of the Fiscal Council.

3. The President of the Fiscal Council will be responsible to the Parliament for the fairness and accuracy of the analysis, studies, opinions and recommendations prepared by the Fiscal Council.

4. The rules of organization and operation of the Fiscal Council will be adopted by its members by unanimous vote.

5. The Fiscal Council shall have a quorum if the majority of its members are present, including the President or, failing that, the Vice-President. Decisions will be taken by simple majority of those present.

Article 57.

The President of the Fiscal Council will receive a monthly allowance equal to that of a state secretary and the Vice-President will receive a monthly allowance equal to that of a deputy state secretary. The other members of the Fiscal Council will receive an allowance of 90% of the Vice-President allowance and is granted if the President finds that the targets were accomplished in the Council. The allowances will be covered from the budget of the Council.

Section 3

Termination of Membership of the Fiscal Council

Article 58.

1. Membership of the Fiscal Council shall be terminated in the following situations:

(a) At the end of the term for which he was elected, under the provisions of article 55, paragraph (1);

(b) Upon resignation;

(i) upon the establishment of incompatibility as defined in article 55 paragraph (6);

(ii) if the member commits a crime established in a final court decision;

(d) Upon replacement in case of impossibility for exercising the mandate, if a member of the Fiscal Council is unable, for at least 90 consecutive days, to attend to his duties arising from such mandate.

(e) In case of death

2. Resignation shall be communicated in writing to the presidents of the budget committees of the Parliament.

Section 4

Secretariat of the Fiscal Council

Article 59.

1. The administrative functions and preparation of analysis, forecasts and documents underlying the opinions, evaluations and recommendations of the Fiscal Council will be performed by the Secretariat of the Fiscal Council, which will operate within the Romanian Academy.

2. The rules governing the organization of the Secretariat of the Fiscal Council, including its organizational form, and its operation shall be established by the Fiscal Council.

Article 60.

1. The Fiscal Council will set its own budget as a separate title in the budget of the Romanian Academy.

2. The necessary budget for the first calendar year will be provided through allocations from the reserve fund.

3. The Secretariat of the Fiscal Council cannot exceed a number of 20 positions. The wage rights of the staff from the Secretariat are established by assimilation with the wage rights of the staff from the Ministry of Finance.

4. The financial operations of the Fiscal Council will be audited by the Court of Accounts of Romania.

Section 5

Annual Report of the Fiscal Council

Article 61.

1. By the end of June, the Fiscal Council will issue and publish the Annual report.

2. Each Annual Report of Fiscal Council shall include a discussion and analysis of the implementation of the fiscal policy set forth in the Fiscal Strategy and Annual Budget approved in the previous budget year.

The Annual Report shall, at minimum, contain the following information:

(a) A section containing an ex post evaluation of the macroeconomic and budgetary forecasts set out in the Fiscal Strategy and the annual budget to which the annual report corresponds, including if is necessary the reporting of potential persistent deviations in the same sense in the macroeconomic projections compared to the actual data, which were recorded over a period of at least 4 consecutive years;

(b) A section containing an assessment of progress against the fiscal policy objectives, targets, and indicators set out in the Fiscal Strategy and Annual Budget to which the annual report corresponds;

(c) A section containing an assessment of the Government’s compliance with the principles and rules of this law during the preceding budget year;

c¹) ex post evaluation of the analysis of public expenditures carried out according to the provisions of art. 311 of Law no. 500/2002, with subsequent amendments and additions;

(d) A section containing recommendations and opinions of the Fiscal Council in improving the conduct of fiscal policy consistent with principles and rules of this law in the current budget year.

Chapter XI

Responsibilities and Sanctions

Article 62.

The responsibilities of the Government under this Law are:

(a) To ensure that the legislated program of the Government is fiscally sustainable and complies with this Law;

(b) To manage the public finances and public resources in a manner that is consistent with the provisions of this Law which shall include respecting the fiscal principles and fiscal rules and implementing the fiscal strategy including through proposing annual budgets that are fully aligned with this Law and with the fiscal strategy;

(c) To exercise all powers in a way that ensures compliance with this Law and with the fiscal strategy including issuing government ordinances and decisions in compliance with this Law;

Article 63.

The responsibilities of the Ministry of Public Finance under this Law are:

(a) To monitor the adherence to the fiscal strategy, fiscal responsibility principles and fiscal rules and other provisions specified under this Law and other legal and policy requirements and to inform the Government about any slippage from those;

(b) To provide accountability documents as required by this Law;

(d) To manage the annual budget process to ensure compliance with this Law;

(e) To monitor the financial and non-financial performance of the central and local authorities in connection with the requirements of this Law;

(f) To issue rules, manuals, directives, decrees, instructions or notifications to give effect to the requirements under this Law.

Article 64.

The responsibilities of line credit officers and other entities under this law are:

(a) For each line credit officers shall ensure that all his decisions are made in accordance with the requirements of this law including the fiscal responsibility principles, fiscal rules, and the fiscal strategy;

(b) To monitor the financial and non-financial performance of entities accountable to the minister to ensure performance is in line with the requirements of this Law;

(c) To provide the Ministry of Public Finance, in the format and time requested, the information needed to prepare the Fiscal Strategy, and to be responsible for the accuracy of information provided;

(d) Provide the Ministry of Public Finance, in the format and time requested the information needed to prepare the reports provided by this law and any other information about the decision and situations that may have an effect on fiscal and economic outlook, and respond for information provided.

Article 65.

Breaching the provisions of this law by the members of Government attracts political responsibility jointly or individually according to the Romanian Constitution and the Law 115/199 on ministerial responsibility, republished.

Article 66.

1. The central and local government institutions have the obligation to provide the Ministry of Public Finance, in the format and within the time requested, with the information necessary for implementation of this law.

2. Non-compliance of the provisions of paragraph (1) represents contravention and is sanctioned by fine by up to 5.000 lei.

Article 67.

1. The central and local government institutions and officials of SOEs whose budgets are components of the consolidated general budget are required to comply with the provisions of this law, including objectives of fiscal responsibility and fiscal rules provided in articles 5-18, 21, 23-25 and 30, the expenditure and borrowing ceilings, the budget balance targets specified in articles 31. Any violation of these provisions leads to taking one or more of the following measures:

(a) submission to the Government or by the case in the deliberative organs of local government of an adjustment program for spending cuts or the restructuring, and by the case, the merger of the institutions concerned;

(b) prohibition to issue guarantees and to contract and draw loans, until the rectification of the financial situation and the compliance with the approved indicators;

(c) prohibition to increase in the next budget year of the expenditure and loans ceilings due to overruns in the current year budget commitments;

(d) local authorities, self-financed public institutions and SOEs whose budgets are components of the consolidated general budget will offset the deficits of previous years with surpluses recorded in the next budget year.

2. The Fiscal Council will assess the compliance with this law by its Annual Reports, making its findings public.

Article 68.

It is considered contravention, and is punished according to article 69 the commitment or the payment of expenditures above that set by the annual budget and the quarterly ceilings set and also any legal commitment obliging the State or local authorities to incur an expenditure above the level approved under the relevant laws in force.

Article 69.

1. Failure to comply with the provisions of articles 16, 18 paragraph. (4), art. 24 and 31 paragraph (1), represents a contravention and is punished, depending on the degree of guilt of those responsible, with a fine between 2,000 and 20,000 lei, and prejudice recovery, as appropriate. During administrative investigation, those responsible are suspended from duty.

2. Establishing contraventions for the non-compliance of the provisions of art. 16 and 24 and the application of a fine is the responsibility the Court of Auditors.

3. Establishing contraventions for the non-compliance with the articles 18 paragraph (4) and 30 paragraph (1) and the application of a fine is done by the persons mandated by the Ministry of Public Finance.

4. After the penalty becomes final, it is published on the website of the Ministry of Public Finance.

Article 70.

The contraventions provided under articles 68 and 69 are applicable under the provisions of Ordinance of the Government 2/2001 regarding the legal system of contravention, approved with modifications by Law 180/2002, as subsequently amended and supplemented.

Article 71.

The compliance with the provisions of this law shall also be verified by the Court of Auditors according to the competencies and the responsibilities of this institution provided by the provisions of Law 94/1992 regarding the operating of the Court of Auditors, republished, applying the sanctions provisioned by this law as well as the sanctions provisioned by the relevant public finance legislation.

Chapter XII

Entry into Force

Article 72.

1. Within 45 days after publication of this Law, the entities referred to in article 55, paragraph (2) will transmit to the budget and finance committees of Parliament, the nominations for the members of the Fiscal Council.

2. Within 30 days after the transmission of nominations under paragraph (1), the budget and finance committees of the Parliament will set up hearings to be followed by a vote in a joint session of Parliament. The committees will then send to the President of the Romanian Academy the list of persons approved to be on the Fiscal Council.