EXCLUSIVE: The PSD wants to reimburse from the EU funds the projects of the local barons. A solution to reduce the budget deficit

The PSD wants to reimburse from the European funds the unfinished projects awarded to the local barons via the National Local Development Program (PNDL), a method by which it wants to diminish this year’s budget deficit. For the PSD’s move to be put into action, however, the formal approval by the European Commission is required, as well as Brussels’s acceptance to expense each project proposed by Romania.

However, according to G4Media.ro, the government has not yet sent a request to the European Commision to accept reimbursement for these projects, many of which are of extremely low relevance to the local communities. The PNDL runs under the Ministry of Development, currently lead by Paul Stanescu, the PSD baron from Olt.

What’s the PSD stakes behind this initiative?

First, the need to control the budget deficit, which threatens to exceed the assumed target of 3% of the Gross Domestic Product (GDP). If Brussels reimburses a large amount in the current year through this new mechanism of financing unfinished projects, for which the government has already made payments in 2018, then the funds recovered from the EU will serve to reduce the current budget deficit.

Secondly, it would increase the level of absorption of European funds, a chapter in which Romania does not excel due to the lack of, or delay in the major infrastructure projects.

Thirdly, if the European Executive agrees with Romania’s proposal, it would set a precedent that the Romanian Government will make use of again in the future.

How has it come to this? The proposal has never been made public by the government or by the PSD leadership. It was an amendment proposed by the Budgetary Committee of the Chamber of Deputies to the bill that approved the Government Emergency Ordinance no.30 / 2018, issued by Dăncila’s Government in April.

The Budget Commission approved the amendment, which has then passed a voted in the Chamber of Deputies, before being sent for promulgation.

What provisions this approved amendment introduces:

„The unfinished projects, financed by the National Local Development Program, approved by the Government Emergency Ordinance no. 28/2013 for the approval of the National Program for Local Development, approved by Law no. 89/2015, as subsequently amended and supplemented, and by Government Emergency Ordinance no. 6/2017 for amending and completing some normative acts, as well as for establishing measures for the realization of investments financed from public funds, approved with amendments and completions by Law no. 250/2017 may be reimbursed from the European structural and investment funds in the 2014-2020 period program.”

It is for the first time that Romania considers reimbursement for the PNDL projects from the EU funds, a controversial project criticized over time both by the European Commission and by the IMF, even during the PDL government, when it was called the PNDI (The National Infrastructure and Development Program). The program has drawn criticisms for the approval of projects based on political grounds, for the low quality the work, and for reimbursements regardless of results.

Romania has been the first to make a similar move when it convinced the European Commission to reimburse major infrastructure projects previously funded by the European Investment Bank (EIB) and by the European Bank for Reconstruction and Development (EBRD). But those were major projects that have previously passed through the scrutiny filter of the European banking institutions, which added credibility.

It remains to be seen whether Romania will officially send a request for reimbursement to the European Commission for the completion of the PNDL projects and what Brussels’s answer will be.

Traducerea: Ovidiu Harfas