Questions by Eurostat Unit C

EUROPEAN COMMISSION

EUROSTAT

Directorate D: Government Finance Statistics (GFS) and Quality

Request for clarification in the context of the

April 2015 EDP Notification

Date: 10 April 2015

Romania

2nd request

We thank you for your response to our first request for clarification and for the revised EDP tables and questionnaire related to EDP, which were submitted on 8 April 2015.

We would like to clarify with you some outstanding points with regard to the reported EDP data.

We would be grateful if the answers could be provided, by eDAMIS and by email, at the latest by 14 April 2015, 13:00 (CET).Please indicate your answer in colour, starting with: "Answer:"

Eurostat comments are in blue.

1 - Consistency

1.1 Consistency within EDP tables

No issue.

1.2 Consistency with ESA tables:

ESA Table 2

EDP Tables are consistent with ESA Table 2.

i. Please explain the decrease in other subsidies on production (D.39pay) from 1,817 million lei in 2013, to 920 million lei in 2013 and 559 million lei in 2014.Answer: According to the recently information received from MoF, a part of subsidies for Ministry of Agriculture were recorded in other current transfers for years 2013 and 2014. In non-financial accounts this transaction was recorded as D.75. We revised D.39 accordingly in tables ESA 2010.

However, there is a decrease of subsidies due especially to the decrease of subsidies for farmer/agriculture. Until 2013 the subsidies for poultry and pork livestock breading were allocated from the state budget, but starting with 2013 these were financed by EU funds according to measure 215.

Thank you for the reply and the revision.

i. Please further explain how these subsidies from the MoF are recorded on the side of the Min. of Agriculture.

Answer: In national classification at Ministry of Agriculture these amounts are recorded on code 40.15. "Sprijinirea producatorilor agricoli" and 55.01.18. "Alte transferuri curente interne".ii. Please explain who the final beneficiaries of these subsidies are.Answer: The final beneficiaries are farmers in their quality of producers.ii. Please explain the increase in the revenues from other taxes on production (D.29), from 3,629 million lei in 2013 to 4,441 million lei in 2014.

Answer: Please see the answer at section 2.1 Coverage/Current taxes on income and wealth point iv).

Please point out in which line of the BGC we can observe the revenues from this new tax on buildings, please indicate the name of this tax in Romanian and please indicate if the first revenues from this tax were in 2014 or any year before.Answer: This tax on buildings was established in 2014. It is included in line of BGC named "Impozite si taxe pe proprietate" on column State budget.

iii. Please explain the increase in the revenues from other current transfers (D.7) of general government from 11,541 million lei to 13,978 million lei in 2013 and 2014, respectively.

Answer: We checked all transactions classified in D.7 and D.9 and found some errors regarding classification (cod ESA).For example, in 2014, the expenditure already made from the budget, of 1770 mil lei, which will be reimbursed by EU, was recorded in D.92 instead in D.74.

Other amounts received from the EU funds for operational programs financed under the Convergence Objective (infrastructure works 1524.9 mil lei) were recorded in D.7 instead of D.92 and the amount of 1429.2 representing temporal adjustment of EU fund infrastructure was recorded on expenditure side instead of income side.

We had also revised D.9 pay and we will send a revised Table 10.1.i. After your upward revision of D.7 rec to 14.375,4 million lei in 2014, we observe an even bigger increase between 2013 and 2014. Please explain this increase.Answer: The increase of transaction D.7 rec in 2014 compared to 2013 is due to increase of amounts received from EU, in 2013 were 4909,3 mil lei and 2014 7743,7 mil lei.iv. Please explain the increase in the revenues from investment grants and other capital transfers of general government from 4,410 million lei in 2013 to 7,690 million lei in 2014.

Answer: Please see the answer above.ESA Table 25

EDP Tables are consistent with ESA Table 25.

ESA Table 27

EDP Tables are consistent with ESA Table 27.

ESA Table 28

EDP Tables are consistent with ESA Table 28.

GDP

Issues will be raised in the next notification, if any.

2 - Issues by EDP Tables

Thank you very much for providing an explanatory note we really appreciate your effort and would encourage you to continue with this procedure in further Notifications.

2.1 Coverage

- General

In your explanatory note you refer that,

As a result of the fact that the final financial statements from public institutions have not been submitted in due time in order to be included into the EDP tables, in the case of these institutions there have been used provisional data.

This is the case of the data comprised in the balance sheet of central administration (state budget) as well as of the execution data (revenues and expenditures) of public institutions financed from own revenues.

i.Please explain what is the due time for the submission of this information and which institution(s) is (are) responsible for submitting it?

Answer: The submittance deadline of the final data is 50 days from the date when the reported period has expired.

The Institutions that did not submit the data are: The Ministry of Transport, The Ministry of Education and The Ministry of Economy. We thank you for the information.

ii. Please explain what provisional data has been used? Are you referring to the monthly accumulated BGC as published in http://www.mfinante.ro/execbug.html?pagina=buletin or some other source of information?

Answers: The cash data regarding budget execution are the same as the ones published on the Internet page. For the accrual data there have been used provisional data reported on a monthly basis from public institutions. We thank you for the information.

iii. Please explain, in terms of future revisions, what are the possible implications of the use of this provisional data, through presenting different scenarios of the possible impacts in deficit, Maastricht debt and GDP.

Answers: We believe that there will be an impact on the deficit of public administration that will not exceed 0.1% from GDP.

The revision of Maastricht debt could be made after the data are audited by the Court of Account, if it is the case, in the second part of the year. According to the EGO no 64/2007 concerning public debt only the Ministry of Public Finance is authorised to contract debt, and the other central government entities have no authority to contract debt; that means the Maastricht debt is not affected by the data not submitted by these central government entities.

We thank you for the information.

- Current taxes on income and wealth

Also in you explanatory note you refer that:

() corporate profit tax has changed the date of payment from January to March, and, as a consequence, when calculating accrued revenues for 2014, the collections from March 31st 2015 will be used.

Therefore, in the calculation of accrued revenues on profit tax for 2014 we have used estimated data based on program revenue and, since data on collections on March 31 will be available on April 1st, we will submit corrections to the notification after recompiling the accrual corporate profit tax data.

i. Please explain if there was any change in law regarding corporate profit tax, and if yes please send us this Law.

Answer: There is no change in the law regarding profit tax, but we can send you the fiscal code updated in accordance with Government Ordinance 30/2011.

Thank you for the information.

ii. Also, if there was a change, please explain if you have revised all previous years.

Answer: In 2013 when informing Eurostat about applying 3 months time lag for profit tax we revised the whole period from EDP tables. Thank you for the information.

iii. Please explain when you will provide the referred corrections to EDP Notification.

Answer: We will provide them together with the answers of the 1st Round of clarifications, because the data are available after submitted the EDP tables.

Revised data will be in amount of -132.5 million lei, out of which - 135.5 million lei state budget and +3.0 million lei to local budget.

iv. In terms of ESA transaction D.5rec, we observe an increase of 15% from 2013 to 2014. Please provide us a file with the following information, for each tax included in this transaction:

Name of the tax;

Cash income, month by month, for each of the taxes, from January 2011 to March 2015;

Time-lag used for the compilation of accrual-based accounts.

Answer: In the Fiscal Code a special tax on building was introduced according to Government Emergency Ordinance no.102/2013, to be paid by legal persons. It has been applied since 1 January 2014 and was collected by the state budget.

According to GEO no102/2013, the special tax will become compulsory for:

Romanian legal entities (except public institution, national research and development institutions, associations, foundation, non-profit institutions);

Foreign legal persons, which carry out activity through a permanent establishment in Romania;

Legal persons with head offices in Romania (set up according to European legislation)The tax is paid in two equal instalments up to 25 May and 25 September.

In 2014 the value of the tax on building collected by the state budget was 1562 mil lei and was classified in D.59 instead of D.29 other taxes on production according SEC 2010 4.23a).

Please see in the table below the revised value for D.5 and D.29:20132014

D.537570.141343.0

D.293629.35803.0

The increase of transaction D.5 in 2014 compared to 2013 is due especially to the increase of the following taxes:

Tax on revenues of non-resident natural persons;

Tax on wages;

Tax on revenues from the exploitation of natural resources;

Tax on micro-enterprises incomes;

Tax on profits from economics operators;

Tax on profits from commercial banks.

The increase in the revenues from other taxes on production D.29 is due to increase of:

revenues from sale of emission permits; tax on building (new tax).In 2014, there have been included new measures (infoltax and the property tax on special constructions (Government Emergencies Ordinances no 5/2013, no 6/2013 and no7/2013).Aside profit tax (which have time lag 3 months) other fiscal taxes has time lag one month.

Please see the attached table for state budget "Point 4 question 1".

i. Thank you very much for providing this table and the explanations. We resend it to you in attachment: in it, we have applied the time-lags indicated by you. Also, given that you make no monthly cash split for other taxes, we applied on it a proportion based on the monthly distribution of all other taxes. Our results are the following:

In the first line we provide the result of our calculation based on the data you have provided us now. The second line is D.5REC from ESA Table 2.For all years provided, we get a different (smaller) amount then what you report under ESA Table 2. Please explain thoroughly.

Please indicate also in the file, for each of the taxes, under which item of BGC they are included.

Answer: Our table is related only to state budget. In the GCB is the first column "Buget de stat ". As we establish in dialog visits from 2008 time adjusted cash it is apply only to fiscal revenue which are monthly term to be cashed and for profit tax three month time-lag.

We attached a table as a synthesis with accrual adjustments and amounts included in transactions D2,D5,D6. Lines and columns are similarly as BGC, but we do not include all amounts from BGC only amounts which are cashed monthly (and profit tax 3 months) and are related to reporting year. ii. Please provide for D2.REC a file similar to the one provided for D5.REC, with the indication for each of the tax of the:

time-lag used for accrual adjustment;

Cash income, month by month, for each of the taxes, from January 2011 to March 2015;

sub-classification (whether D.211, D.212, D.214 or D.29);

indication of the line in the BGC (or other, if the case) where this tax is included.

Answer: please see the table attached.iii. Please explain how is the increase in D.29 rec in 2014 affected by the revenues from sale of emission permits if these were not surrendered, as you mention in EDP Table 2A and further in this report; Also, please explain who exactly collects this tax, i.e., under the WB or B.9 of which institution are these revenues included.Answer: EUA certificates surrendered are recorded in WB (126.3+173.6=299.9 mill lei) and ETS certificates are recorded in B9 of Public institutions financed partially or totally from own revenues at Ministry of Economy (547 mill lei).

EUA certificates not surrendered are not included in WB ( 436.9-299.9=137 mill lei), they are in treasury account. In other account payable detail 4 is 547+137=684.4 mill lei.v. Please explain if there has been any other change in the date of cash payment of any other tax, or if you have decided to change the time-lag for any other tax. If yes, please refer which and why.

Answer: Aside from profit tax modification about which we have informed the Eurostat in 2013, we did not change any other time lag for other tax. If we should change it in the future we will inform the Eurostat in advance.We thank you for the information.

2.2 EDP Tables

Table 1

i. Consolidated interest for the general government increased both in the years 2012 and 2013. In 2014, we observe a decrease. Please explain the causes for this decrease.

Answer: The Maastricht debt sharply increased during financial crises since 2009 due to the excessive deficits and refinancing of public debt. Starting with 2013 the deficits decreased below 3% and consequently the financing needs, while the associate cost of new debt contracted was decreasing following the developments on the financial markets, both domestic and external markets. Having in view that the major part of new debt at central level was represented by government securities, the yield of government securities issued on domestic market decreased in 2014 by 130 bps on short term and around 180- 210bps on medium and long term. Besides, according to the Government Public Debt Strategy on medium term, the government securities are re-opened until they reach a large volume (around 1.5-2 billion Euro equivalent) in order to develop the secondary market of government securities, and in the context of decreasing yields the premium received at these re-openings in 2014 amounted 1.8 billion lei. The interest rates for Romanian Eurobonds issued on international capital markets also decreasing in 2014, driven by the evolution of interest rates in the EU and the continued compression of the spreads for Romania. Thus, the yield for the Eurobondwith 10 years maturity issued in October 2014 decreased to2.97% compared to yield of 3.70% for Eurobond issued in April 2014.

We thank you for the information.ii. Please explain the considerable decrease in the stock of long-term loans in 2014.

Answer: The loans are in repayment period while the new debt contracted during last years at central level is represented mainly by government securities issued on domestic and external markets. In 2014 the highest amount repaid was for the IMF loan (865.9 million SDR, respectively 4322.2 million lei equivalent). We thank you for the information.Table 2A

- Loans, granted (+) and repayments (-)

i. Please explain what are the Loans granted by government to IFN, for which we observe an accumulated 635 million lei of loans granted.

Answer: Loans are granted by government to IFN (financial institutions engaged in lending) to provide guaranty to farmers and SME.

These transfers are treated as loans with no impact on B9 in accordance to Eurostat conclusions. (Final findings Romania dialog visit July and September 2011).

Loans are reimbursed to Ministry of Agriculture and are used to the same destination. That means that in fact we have not reimbursement in state budget revenue, from these loans.i. Please remind us of what was then discussed and what was the decision taken.

Answer: We present finding and conclusions related to this issue.

ii. Please detail to what type of loans (and creditors) do the repayments of loans shown in Table 2A refer to.

Answer: Article Loans, repayments are related to the reimbursement of loans granted to state companies in the period 1995-1997 and which was not reimbursed yet.i. Please indicate the state companies and the related amounts of loans.

Answer: Companies are Conel and Romgaz.ii. When are these repayments expected to be made?

Answer: We attached a table with loans.iii. Why are these repayments classified as revenues in the BGC if no repayment has in fact been made?

Answer: These loans was not reimbursed entirely In revenue of BGC are recorded amounts cashed and their reimbursement are recorded on expenditure .

- Other accounts receivable (+), Military Expenditure

i. For 2013 and 2014, we observe a considerable increase in the cash payments. Please explain, detailing, to what military equipment do these cash payments relate?

Answer: Cash payments for 2013 and 2014 represent advances for equipments (F16 aircraft).

Please explain what is the total value of the F16 aircraftsand related support components.

Answer: We receive information about all military equipments (included F16) from Ministry of Defence according to table 7 from EDP Questionnaire. The value of F16 aircrafts is annex to the Law no 240/2013 under the secret status. See art.5 " Sumele estimate, necesare realizrii activitilor prevzute la art. 1, se vor asigura prin bugetul Ministerului Aprrii Naionale, conform anexei*). *) Anexa nu se public, fiind clasificat, potrivit legii."..ii. On the other side, the same trend is not observed in the deliveries. When will this military equipment be delivered?

Answer: The deliveries are support components of these equipments received in advance. The basic components of the equipments will be delivered in 2016 and 2017.

- Other accounts receivable (+), EU funds

i. Thank you for including the adjustment regarding the income from EU for infrastructure works in Table 2A.

Please confirm that the reimbursement from the EU in 2014 is included in line Alte sume primite de la UE pentru programele operationale finantate in cadrul obiectivului convergenta , Bugetul de Stat of Bugetul General Consolidat, Buget (BGC), in the amount of 1,524.9 million lei.

Answers:

Yes, we confirm.Thank you for the confirmation.

We observe also that you have revised the line expenditure on behalf of EU in the amounts concerning the above mentioned adjustment. Thank you.

ii. Please explain what is the difference in concept between the adjustment lines expenditure made on behalf of EU, Payment from state budget on behalf of EU and Payments from state budget on behalf of EU Min. of Labour and Min Economy.

Answer:

Payment from state budget on behalf of EU was an exceptional payment made in 2012 representing advanced payments from the state budget in order to help beneficiaries who have submitted financing documents until the reimbursement by the EU.

According to Government and Deficit Manual cap II.6.22. paragraph 25, any payment made as advances must be recorded as a financial transaction at the moment when the payment is being made by the state budget. This transaction did not repeat in the following years.i. Please explain who, and when, repaid government for this advance.

Answer: This advance is reimbursed by the Ministry of Finance through the Authority of Payment Certification (it is used by APC as cash flow). They can repay it anytime from EU transfers, but no longer than at the end of the Operational Programs 2007-2013.

Payments from state budget on behalf of EU Min. of Labour and Min Economy.

These transactions represent a loan from treasury granted to the 2 ministries with MA role, in order to make payments to the beneficiaries. The reimbursement had to be made with amount received from the EU. At the end of 2012, the amounts did not arrive in due time, therefore the two ministries have reimbursed to the Treasury the amount of 669 mill lei from the amounts received from the State Budget, while the money from the EU would be transferred to the State Budget.

Also this payment was made with exception title in 2012. In this moment even the year is closed, reimbursed from treasury are made in the following year with amounts received from EU. ii. Please explain what you mean by MA role.

Answer: MA role mean Management Authority which is in charge with Operational Program for Human Resources (POSDRU in romanian language). Expenditure made on behalf of EURepresents expenditures made for projects financed from EU Funds by beneficiaries who are public institutions on behalf of the EU and not reimbursed in the current year, these amount following to be reimbursed in the next year. Moreover, it represent the amount with which is adjusted the deficit in order to neutralize the impact from EU Funds according to the Eurostat decision.

iii. Please explain why you do not include under this adjustment the EU Funds related to non-government beneficiaries.

Answer: We also make adjustments for payments made on behalf of EU from non-government units (farmers) if it is the case, as if Ministry of Agriculture do not have enough cash flow. This cases are very rare. Payments to other non-government units as ONG do not tranzit WB so we do not need to make adjustments.iv. What is the managing authority of the EU funds related to non-government beneficiaries? In which institutional sector is this unit classifies? Could you please forward to us the accounts of this unit?Answer: There are 7 managing authorities

. 1.ORITATEA DE MANAGEMENT PENTRU PO DEZVOLTAREA CAPACITATII ADMINISTRATIVE (Ministerul Dezvoltrii Regionale i Administraiei Publice (MDRAP), 2. AUTORITATEA DE MANAGEMENT PENTRU PO ASISTENTA TEHNICAMinisterul Fondurilor Europene

3. AUTORITATEA DE MANAGEMENT PENTRU POS TRANSPORTMinisterul Transporturilor4. AUTORITATEA DE MANAGEMENT PENTRU POS MEDIUMinisterul Mediului i Schimbrilor Climatice, 5. AUTORITATEA DE MANAGEMENT PENTRU POS CRETEREA COMPETITIVITII ECONOMICEMinisterul Fondurilor Europene 6. AUTORITATEA DE MANAGEMENT PENTRU POS DEZVOLTAREA RESURSELOR UMANEMinisterul Fondurilor Europene 7. AUTORITATEA DE MANAGEMENT PENTRU PO REGIONALMinisterul Dezvoltrii Regionale i Administraiei Publice (MDRAPThese authorities pay to private and public beneficiaries that apply for an eligible project within the respective operational programme.

The financial mechanism of the EU funds is made so that in the WB to be included only the projects of public beneficiaries. In the budget of the ministries that have MA departments it is recorded only the national co-financing within the WB. The payments on the behalf of EU of the MA to private beneficiaries are made from advances from EU, treasury loans and are not reflecte din the WB. The MAs do not have separate accounts as they are included in the budget of the Ministry to which they belong to.

The budget of these MAs can be noticed in the budgets of the ministries at title 56 - we attach as an example from 2013 the budget of the Ministry of Regional Development and Public Administration where we have underlined with green the positions from which payments are made.

The payments on behalf of EU of the MAs to the public and private beneficiaries are made extra-budgetary.

v. Please explain why, for the EU funds where the final beneficiary is a government unit, you include under the adjustment only the expenditures not reimbursed in the current year and not all inflows (and outflows)?Answer: We have considered that we have to record in Questionnaire only adjustments with impact against WB amounts received in the same year from EU has no impact on WB. If you consider to put all amount received we can take in consideration and modify the questionaire.iii.In Questionnaire Table 6, you record as inflows included in the working balance 771.3 million lei in 2014. Nevertheless, taking into account the project pointed out in question i. above, there is at least a 1,524.9 million lei cash payment from the EU to the central government. Please explain if you are not recording the amount for all flows from EU to the central government of Romania and why.

Answer: We have updated the questionnaire because indeed the amount of 1524.9 million lei was not included in 771.3 million lei. Moreover, we have also included the amount of 564.9 million lei which is reflected in the case of the revenues in the state budget in the working balance corresponding to the payments from the previous years.

Thank you.

iv. Please explain what you record under the line outflows in Questionnaire Table 6. Flows from government to non-government units, expenditure of government financed from EU funds or both?

Answer: Represent expenditures made for the projects financed from EU Funds by the beneficiaries who are public institutions on behalf of the EU and non-reimbursed in the respective year. vi. Please refer to question v. under this sub-chapter.Answer: We have considered that we have to record in the Questionnaire only adjustments with impact against WB amounts paid in the same year from EU has no impact on WB. If you consider to put all amount paid we can take in consideration and modify the questionaire.The exception is represented by the payments made by The Ministry of Agriculture to the farmers if there is not enough cash flow.

v. Please provide us a breakdown of the amounts of inflows and outflows for the amounts among net lending/net borrowing of other government bodies.

Answer: Local budget inflows = 1,327.9 mill lei

outflows= 1,650.3 mill lei

Public institutions partially or totaly financed from own revenues

inflows = 433.1 mill lei

outflows=549.5 mill lei

Social security

inflows = 38.8 mill lei

outflows=49.5 mill lei

vii. When summing these inflows to the inflows of central government, as reported in Questionnaire Table 6, we reach an amount of 4,661 million lei, which is still smaller than the 11,099.7 million lei reported in BGC as Sume primite de la UE in contul platilor efectuate si prefinantare. Please thoroughly explain.

Answer: There are not recorded the revenues cashed in the same year, for the payments on behalf of EU in the same year. See answer v si vi. at the same sector..If we add too the amounts for the payments cashed in the same year, we arrive to the amoount in the BGC( with a difference of 127 resulted from the updated data compared to the BGC. viii. Please explain the 21% increase in the cash revenues under Sume primite de la UE in contul platilor efectuate si prefinantare.Answer: Starting with 2014 has increase EU fund absortion specially on Coesion Fund and they are investment projects in railways and highways which are public beneficiaries at central and local level.

vi. Do all the EU funds go through either the Bugetul General Consolidat and the other government bodies?

Answer: In the General Consolidated Budget (Bugetul General Consolidat) there are reflected the EU funds for the public beneficiaries in S13.

In the General Consolidated Budget there are included both Public institutions financed partially or totally from own revenue and public institutions of unemployment fund, while in the EDP these public institutions of unemployment fund are included in the social security accounts.Please refer to question iii. and iv. under this sub-chapter.

Answer: All EU funds related to Public institutions financed partially or totally from own revenue, companies subordinated to Ministry of Transport, are reflected in BGC.vii. Please explain to what the correction EU Funds corrections, under Other Adjustments refers to.

Answer: The financial corrections applied in 2014 represent percentage deductions from the value of eligible expenditures, accepted by the member state, as a result of deficiencies of the control and management system of some operational programmes. These are applied at the level of the operational programme and priority axis and are calculated according to a methodology approved by Government Decision, issued for each operational programme to which this kind of lump sum financial correction is applied.

Thank you for the information.viii. In both Questionnaire Tables 4.1.2 and 6, you report a series of payables of EU flows. Nevertheless, we cannot find this adjustment in the EDP Tables 2. Please explain.

Answer: The series of payables of EU flows are recorded in EDP Tables 3B and 3A under financial instrument F.8(cash balance of EU funds). These adjustments are not recorded in EDP Tables 2.ix. Please explain to what these payables on EU flows refer to.Answer: The payables on EU funds refer to the amounts that are received from EU and not yet used. These amounts are recorded only in table 3B.- Other accounts payable (-), Court decisions with retroactive effecti. As far as we understand, this adjustment relates to Government Emergency Ordinance nr.71/2009 approved by Law no. 230/2011.

This GEO established a payment obligation of 3,240 million lei, which is what can be observed in the entry as other accounts payable in 2011, as well as payment instalments from the State of Romania to the concerned workers 5% in 2012, 10% in 2013, 25% in 2014, 25% in 2015 and 35% in 2016.

The amounts imputed in this line in the years 2012 and 2013 match with what was described above. For 2014, applying the indicated instalments, we reach an amount of payment of 810 million lei, rather than 1,514 million lei as recorded. Please explain.

Answer: For 2014 there have been paid two instalments in one year (for 2014 and 2015), so instead of 810 million lei there have been paid 1514 million lei. Moreover in 2015, there has been recorded the amount of 778.2 mil lei estimated to be paid in the account of 2016.

We thank you for the information.

- Other accounts payable (-), Court decisions according to GEO 17/2012, 92/2012, 103/2013

Thank you very much for your note with some information on this.

i. For what we have understood, these Emergency Ordinances refer to different groups of workers, than the GEO and Law mentioned previously. Please state which is the target group for each of the Emergency Ordinances:

GEO 17/2012 -

GEO 92/2012 -

GEO 103/2013 -

Answer: It is the same group mention in OUG 71/2009 with specification that represents the persons who have won in Court in 2012, 2013 and 2014.

If there had not been made these instalments and these amounts for 5 years, they had to be paid in cash in the year when the decision was made. In the EDP tables there have been recorded as to be paid in 2012-2014, and the cash payments will be made by instalments according to the ordinances mentioned. In conclusion, the 3 Ordinances are applied in order to have a unitary approach for all the persons who have won these rights in Court.

ii. Please state when these ordinances have become executory:

GEO 17/2012 - for those who have won in Court in 2012GEO 92/2012 - for those who have won in Court in 2013

GEO 103/2013 - for those who have won in Court in 2014iii. Please refer the amount of the payment obligation for each of the ordinances, given that these amounts are not provided there:

GEO 17/2012 -

GEO 92/2012 -

GEO 103/2013

Answer: We do not have separate information, for each ordinance. The payment obligation has been recorded in the EDP tables on 2012-2014 at other accounts payable detail 5 Table 2A.

The amounts are recorded in the balance sheet as initial stock and final stock, the flow representing payments of executory titles according to the Ordinances. i. In order to record a payable, you must have the defined amount. Hence, we would appreciate if for each of the Court Decisions, you provide us with an amount of payable and the amounts already paid in cash by the government.

Answer: We do not have detailed information about the Court Decisions. These executory titles belong to every institution and are reported in the balance.

The amounts reported as patment obligation for 2012-2014 have been calculated on the basis of the data reported in the balance as provisions. Moreover, at the budgetary rectifications from 2014 have been allocated amounts with this destination on the basis of the evaluation sent by the ministries. The amounts paid in cash are presented in table 2A at detail 2.

iv. Please explain in which ESA non-financial transaction these payables are being recorded.

Answer: In ESA non-financial transaction these payable were recorded in D.11.i. In accordance with the decision taken during last FAWG meeting, please reclassify these expenditures from D.11 to D.99. Also, if the concerned workers should receive any interest on late payment, please record this, in case you have disaggregated information, as D.75.

Answer: It was a misunderstanding. We applied the decision taken during last FAWG. The amounts established by Court decision were classified in D99 in the year when the decision was taken. But the government did not pay these amounts in that year but in instalments in the next years. The effective cash payments were recorded in the following years in the budget under D11. What we have done was to adjust D11 with these instalments already recorded in the year when the Court decision was taken. ii. The Court decisions on wage rights should, et ceteris paribus, increase the level of the transaction where they were classified, which in the case of Romania, as you stated was D.1. The court decisions in 2011 amount to 6.4 billion lei. Please see below:

The first line refers to what you have reported in ESA Table 2 regarding D.1 PAY for S.13, and the second line subtracts, for 2011, the referred 6.4 billion lei. What can be observed then is that even including the considerable amount of wages regarding the court decision in 2011, this year presents a considerably low value when compared to all others in the series. When excluding the impact of the court decision in 2011, the amount of D.1Pay is abnormally small, showing a decrease of 26% from 2010.

Please thoroughly explain this considerable decrease on wages in 2011.Answer: In July 2010, the salaries of public sector workers were reduced by 25% and some salary bonuses were cut. Even more, the number of employees decreased due to the policy adopted to reduce the expenditure on wages.v. Please explain if you are recording these transfers to the worker on a net or gross basis. In case of recording on a gross basis, please indicate for each of the concerned years the impact, in ESA2010 terms, in taxes on income and social contributions.

Answer: We recorded these transfers on gross basis.

Income tax and social contributions are recorded together with other contributors, but from the estimates made they represent approximately 44% from cash payments made for this destination. Thank you for the information.

- Other accounts payable (-), EUA certificates sold and not yet distributed

i. Please refer the amount collected by the State of Romania in the sale of EUA certificates in 2014.

1. Revenues from the EUA certificates sold (transfers by EU)

436,9 mill lei

2.Revenues from the ETS certificates sold allocated to the producers of electric energy

547,4 mill lei

3. Expenditures broken down by revenues at State Budget 29%

126,3 mill lei

4. Investment expenditures

173,6 mill lei

5=1+2-3-4 Payable 684,4 mill leii. Please explain if the Revenues from the ETS certificates sold allocated to the producers of electric energy relates to certificates surrendered or not surrendered?Answer: These revenues from the ETS certificate are not surrendered.

They are revenues received by the Ministry of Economy, have not been surrendered and are reflected in the balance of the Ministry.

ii. Please explain the correction Expenditures broken down by revenues at State Budget 29%

Answer: According to the european legislation, the amounts received from the EU are transferred in the percent of 29% to the state budget and the rest of 71% for investments.

These percents are calculated according to the EU methodology and approved according to Gov. Emergency Ordinance no. 115/2011

The amount of 126 represents 29% from certificates received at the state budget and can be found in the WB.

iii. Please confirm the correction investment expenditures refers to the EUA certificates.Answer: The remaining certificates of 71% are allocated with the destination for investments to diminish the pollution.In 2014, only 173,6 million have been surrendered. ii. In 2014 there is an accumulated stock of EUA certificates sold but not yet surrendered to the final beneficiaries in the amount of 1,159 million lei. Could you please inform us on when these certificates will be distributed to their buyers?

Answer:

The EUA certificates transferred by the EU are used for the investments made to decrease the pollution.

The ETS certificates of the producers of electric energy are allocated when the buyers justify the investment according to the national investment plan by instalments until Sem. I 2020.Thank you for the information.

- Other accounts payable (-), Bauspar system

i. Regarding Bauspars cash-accrual adjustments you have included two adjustments in EDP Table 2A.

Nevertheless, regarding that these adjustments refer both to other accounts payable, we would appreciate if you eliminate the adjustment under Other adjustments (+/-) and change the line under Other accounts payable (-) to the following:

This change would have no impact in B.9.

Answer: We agree and we will change accordingly.We thank you for the confirmation.

Please assure also that in the financial accounts you record under F.89 the same amounts as in the table above, but with an inversed sign.

Thank you very much.

Answer: We confirm that in the financial accounts the amounts regarding Bauspar system were correctly recorded with reversed sign and in the questionnaire Table 4.1.2 these amounts will be reflected in only one row.We thank you for the confirmation.

- Net borrowing (-) or net lending (+) of other central (and local) government bodies

Regarding other government bodies of central and local government, we observe that their impact on B.9 has increased from+348 million lei in 2013 to +2705 million lei in 2014.

i. From the BGC published in http://www.mfinante.ro/execbug.html?pagina=buletin we observe that the capital revenues (venituri din capital) of the Bugetul institutiilor publice finantate integral sau partial din venituri proprii (which we believe corresponds to central and local public institutions financed partially or totally from own revenues), increased from 87.5 million lei (2013) to 565.7 million lei (2014).

Could you please explain the origin, and use, of these revenues?

Answer: Capital revenues include the amount of 470 mill lei cashed by the Ministry of Interior as a result of selling the stocks from State Reserve. These revenues will be used in 2015 in order to refresh the stocks from the State Reserve. i. Please explain to what stocks you refer to and who their buyer is.Answer: Stocks are related to food, water, wheat, cereals (what is necessary for calamities) and the buyer has been established during the auction.

ii. Also from the BGC we observe that he expenditures in transfers to other public administrations has decreased from 2,427 million lei in 2013 to 791 million lei in 2014, which by itself explains around 69% of the improvement of B.9. Please explain this decrease.

Answer: By 2014, some self-financed institutions (OSPI--Office for State Participations and Privatisation in Industry) recorded on revenues dividends cashed from state companies and on expenditures the transfer of these to the state budget.

The amount was consolidated in the GCB also, as it can be noticed on the Column with Consolidations. The Court of Accounts has considered that those amounts only transit OSPI and as a result of this transaction they have to be transferred to the State Budget. i. Your reply would explain an increase in the transfers to other public administrations, rather than a decrease. Also, we do not see a considerable change from 2013 to 2014 in the dividends paid to S.13, in order to explain the above mentioned issue. Please give us further details on this operation, as there may be some misunderstanding. Answer: Maybe it is a misunderstanding and we try to explain again.\

Until 2014 some self-financed institutions (OSPI--Office for State Participations and Privatisation in Industry) recorded on revenues dividends cashed from state companies and on expenditures the transfer of these to the state budget.

Starting with 2014 Court of Accounts has considered that those amounts only transit OSPI and as a result these amounts are transferred to state budget without being recorded in the budget of OSPI.

ii. Please point, in EDP Questionnaire Table 3, the OSPI, and explain under which column of BGC is this unit included.

Answer: At row 69 into Ministry of Economy from questionnaire table 3, while in the BGC they appear in the column with public institutions financed totally or partially from own revenues.

- Net borrowing (-) or net lending (+) of CNADNR

When analysing the gross fixed capital formation excluding the tangible assets transferred from CNADNR to the government, for the years you have kindly provided in the annex, we observe the following:

i. Please explain the historically low value of GFCF of CNADNR in 2014 (in two years, the investments of CNADNR have decreased by 5.5 billion lei).

Answer: According to information received from the company for the years 2013 and 2014 the amounts allocated from the budget for investments decreased, which led to a drop of GFCF.i. Thank you for the information. It is clear that there is a drop in GFCF, as it is clear that for CNADNR to incur in investment it needs investment grants from the government, as it does not have considerable own revenues. Our question is what are/were the reasons for these large scale disinvestment. Please thoroughly explain.

Answer: The company encountered problems during 2014 with partners who have contracts for the construction works. Some of them were insolvent or bankrupt; the company was forced to cancel those contract and to sign new contracts with other partners. As a consequence a number of investments were not finished by the end of the year. The subsidies for investments were allocated as construction progressed.ii. Please explain this fall in investment from 2012 to 2014 in the context of the increase in GFCF of S.13 in 2014 when compared to 2012 (+334 million lei). What investment (and from which units) has compensated this fall in the investment of CNADNR?

Answer: Please see in the table below GFCF for the public company that compensated this fall in the investment of CNADNR:

20132014

METROREX475820,8

CNH PETROSANI-7090

AEROPORTUL KOGALNICEANU2,240,3

CFR INFRASTRUCTURA656,61399,5

MECANICA ORASTIE-0,20,3

CANALE NAVIGABILE8,660,1

CNANDR-1781,1-1154,7

ALTE COMPANII CENTRALE133,7267,5

-1214,21433,8

i. Please explain the negative investment of CNH Petrosani in 2013.

Answer: In 2012 there was a disposal of fixed assets (coal mines) according to GEO 84/2011. These assets were transferred to the state.

Disposals of assets were higher than acquisitions resulting in a negative value of GFCF.ii. Please explain the increase in investment by CFR Infrastructura. In what did CFR Infr. invest in 2014?Answer: The investment was materialized in maintenance and modernization of railway infrastructure (railways and stations)- Net borrowing (-) or net lending (+) of CFR Calatori SA

i. Please explain the increase of CFR Calatori SA revenues from subsidies by 377 million lei from 2013 to 2014.

Answer: From the information received from the company, in 2013 company received operating subsidies below the minimum level required to carry out in good conditions the activity. In 2014 the situation was improved by budgetary rectification and by amounts allocated from the reserve fund of government.i. Please explain if these subsidies on production are based on a general regulation applicable to market and non-market producers in general.

Answer: The general regulation is applicable to public and private operators as well.-

Net borrowing (-) or net lending (+) of CN de Cai Ferate CFR SA

i. Please explain the shift, from all previous years to 2014, from other current revenues to subsidies, in the detail above.

Answer: For 2013, after bilateral discussion the company sent us a breakdown of the amounts recorded in the financial statements as operating subsidies D.3. For year 2013 in the financial statements total amount recorded was 502 mil lei,From total amount only 52.9 mil lei is operating subsidies D.39, the rest was recorded as current transfers D.7. Thus was a special situation only for 2013.i. Please further explain this shift. Please explain if these subsidies on production are based on a general regulation applicable to market and non-market producers in general.Answer: The general regulation is applicable to public and private operators as well.ii. Please explain the decrease in intermediate consumption from 2013 to 2014. Answer: In the accounting balance sheet the companies record the expenditure for purchasing raw materials and supplies and not the consumption. In order to meet the national accounts concepts and conceptual adjustment is made by deducing the change in inventories of raw materials in order to estimate the intermediate consumption.

In 2014 the changes in inventories of raw materials increased from 4mil lei to 172 mil lei which led to a decrease in the intermediate consumptioni. Please explain that considerable increase in the inventories of raw materials.

Answer: The increase in inventory of raw materials was done for the execution of future works- Net borrowing (-) or net lending (+), other

From detail 97 to detail 150, all central government bodies do not have any B.9 reported for the years 2011 and 2012, as could be better seen in the Questionnaire Table 3.

Answer: The units from detail 97 to detail 150 from Questionnaire Table 3 are recorded in Table 2A EDP from detail 24 to detail 76.i. We meant units from detail 97 to detail 150 of the EDP Table 2A. There is no B.9 for these units for years 2011 and 2012. Please thoroughly explain.

Answer: The units from detail 97 to detail 150 of the EDP Table 2A were classified from 2013 according to the qualitative criterion after ad-hoc visit from September 2014.i. Please explain if the accounts of these units reclassified to general government in the context of the changeover from ESA95 to ESA2010 were compiled and included in S.13 accounts for all years.

Answer: Yes, we confirm

- Other adjustments (+/-), Compensations titles NAPR

i. According to your explanations during EDP April 2014 Notification, the total estimated amount of compensation titles is 4,500 million lei. This amount is reached, by accumulation, in 2014. Nevertheless, you have included an adjustment regarding the compensation titles for 2015. Please explain.

Answer: For the estimated amount of 4500, the number of the files which have been analysed and an average of files based on previous payments were taken into consideration. This amount has not been certified by the responsible public administration entities.

In 2015 we have requested to ANRP an actual estimation for the current year and for the following years of compensation titles that will be paid in cash. According to the estimation of ANRP, in 2015 will be made payments of some executory titles existent in the stock on Dec 31st 2014 in the amount of 738 mill lei and we estimate that there will be issued new titles in the amount of 890 mill lei on the basis of Law no. 165 and Law no. 9/1998. Thank you for the information.

- Other adjustments (+/-), decommissioning costs

i. According to the information on your request for an opinion letter to Eurostat, the amounts of 80 million lei were transferred in 2014 to the buyer. In our perspective, they would be already included in the WB of the central government, for which case no adjustment here would be necessary. Please confirm.

Answer: The amount of 80 million lei is not included in the WB, according to Law 555/2004, the payments are made from privatization revenues (a distinct account made in the State Treasury from the moment when the privatization has ended). This is why this amount has been included in table 2A.

Thank you for the information.

Table 2C

- Working balance

i. Please explain why the local government has a surplus of 483.8 million lei in http://www.mfinante.ro/execbug.html?pagina=buletin, when the WB in Table 2C is of 1,565 million lei for the year 2014.

Answer: Working Balance of Table 2C consists of cash revenues and expenditures of local budget, while BGC (GGB) in the surplus of 483.8 includes besides the local budget local public institutions financed partially or totally from own revenues on revenues and external and internal loans on expenditures.

These amounts are recorded in Table 2C on the line Non-financial transactions not included in the working balance -1413,2 mill lei and Net borrowing (-) or net lending (+) of other local government bodies +176,7 mill lei.

i. Even if local public institutions financed partially or totally from own revenues were (or are) already included in the surplus of local government in the BGC, why would you des-impact the WB of T2C and then impact it in the line referring to Net borrowing (-) or net lending (+) of other local government bodies? Why wouldnt you leave it as it was?

Nevertheless, from BGC we see that the local public institutions financed partially or totally from own revenues are included in a separate column, part of it we assume regards S.1311 and another part S.1313. In this sense, it is not, as you mentioned now, included in the surplus of local government in BGC.

Hence, please subtract the impact of these from the WB of T2C or further explain.

Answer: Please take into consideration that neither in the BGC or in the EDP have been put together the local sector S1313 with the central sector S1311.

So, in BGC at column "Public institutions..." are included central government units together with small amounts of social securities from "public institutions financed partially..." and NO local government units are included in that column.

Before establishing this table 2C with Eurostat in previous years at dialog visits, we recorded in WB the following: local budget, internal loans budget, external loans budget.

Eurostat decided at that time that the WB of all EDP tables must include only cash budget of state, local and social security as it is presented in bugdet execution, in order to have a unitary recording in EDP tables, like in T2A where the WB includes the state budget cash revenues and expenditures, T2C local budget cash revenue and expenditures, T2D social security budget cash revenues and expenditures.

We have followed the Eurostat advice accordingly.

In the following table we present local administration surplus as it is presented in BGC and EDP.

-mill lei-

BGC (preliminary data) EDP (final data)

Local budget 1849 1565

Internal and

external loans

budget -1342 -1413

Public institutions

financed partially

or totally from

own revenue 144 176,7

financial op -167,8 5,6 D41

Surplus 483,8 -18,1 OAR

1674,1 OAP

-19,6 local companies

-27 adjustments

1620 reimbursements

Surplus 3563,6

In BGC reimbursements are made in the column "Financial operations".ii. If the amounts regarding the expenditure financed from external and internal loans are included in the surplus of local government in the BGC, please indicate which is the line.

We do not understand why you would subtract expenditure from a WB to re-include it labelled as a transaction not included in the WB. This leads us to think that these expenditures are in fact not included in the surplus of local government in BGC

Hence, please subtract the impact of these from the WB of T2C or further explain.

Answer: In BGC the expenditures financed from external and external loans are included at expenditures in the following lines:, projects financed from EU= 635, capital expenditures= 686 and credits reimbursements = 20. - Non-financial expenditure financed from external and internal loans

i. Please explain the decrease in 2014 of this adjustment.

Answer: Even if they had budgetary provisions these amounts have not been spent and we have also noticed this problem, we don`t know the cause yet.

i. Please forward the question to the relevant authorities and provide us an answer in the round for clarifications. Thank you.

Answer: There is a problem with the project implementation because of constructors that enter in bankruptcy and do not finish the works in order to be paid. Another cause is the delay of public procurement contracts. - Other accounts payable (-), amounts to be justified from advances received from EU funds

i. Please thoroughly explain to what this adjustment refers to and why, if it refers to EU funds, it is not included in OAR.

Answer: This adjustment refers to the neutralization of EU Funds for the local budget. These are advances transferred to the government local units out of which there have not been made payments and will be justified. Following the discussion with the NBR, we have decided that these amounts should be registered on payable, an expenditure with a plus instead of a receivable with a minus. i. Please explain who transfers these advances to the local units? The local government or EU?

Answer: these advances are transferred from Management Authority from advances from EU.- Other accounts payable (-), Court decisions

i. Please refer to the questions in Table 2A and provide the same details and explanations for the adjustments made in Table 2C.

Answer: The legal acts mentioned in table 2A refer to these beneficiaries from local government units (especially teachers from pre-university education system). The same unitary treatment is applied.

The amounts are recorded in the balance sheet as initial and final stock, the flow representing the payments of executory titles according to the Ordinances.

i. Please refer to the questions in Table 2A and provide the same details and explanations for the adjustments made in Table 2C

Answer: The amounts reported as payment obligations during 2012-2014 have been calculated on the basis of the data reported in the balance as provisions.Moreover at budget rectifications from 2014 have been allocated amounts with this destination on the basis of the evaluation transmitted by the ministries.

- Net borrowing (-) or net lending (+) of other local government bodies, Other local units

i. Please explain the evolution of B.9 from 2013 to 2014.

Answer: Please see in the tables below the B.9 by local units reclassified into S1313Total District Heating UnitAirportsIDAsOther companies

2014B9-19,6-0,9-20,4-18,620,3

2013B9-250,4-47,6-14,4-18,6-169,8

-230,8-46,760-190,1

B9

20142013difference

CENTRALA ELECTRICA IASI1,3-18,5

CET BACAU-15,5-34,1

TERMICA SUCEAVA-20,4-50,2

DRUMURI MUNICIPALE TIMISOARA0-19,5

HARVIZ SA3,6-17,4

EXPLOATAREA DOMENIULUI PUBLIC CONSTANTA28,9-24,3

ADMINISTRAREA DOMENIULUI PUBLIC CLUJ6,9-2,6

OTHER COMPANIES15,5-3,2

20,3-169,8-190,1

Thank you for the information.

Table 2D

- Other accounts payable (-), Changes in due for payments

i. Please explain the evolution from 2013 to 2014.

Answer: As a result of the implementation of Directive no.7/2011 in the last 2 years the National Health Insurance House has had the obligation to pay all the remaining debts.

Thus change in due for payments has decreased, positively influencing the balance B9. Thank you for the information.

i. Would the Ministry of Finance consider to publish in its website all the information regarding due for payment accounts and not only regarding arrears, as it is the case for now?

Answer: We can analyze this issue and we can publish on a quarterly/annualy basis on the basis of final data. - Other accounts payable (-), Court decisions

i. Please refer to the questions in Table 2A and provide the same details and explanations for the adjustments made in Table 2D.

Answer: For 2014 there have been paid 60,6 million lei the amount foreseen in G.E.O 71/2009, for those 3 Ordinances are recorded in the balance as an initial and final stock, the flow representing executory titles payments accordingly. i. Our apologies for being imprecise. Please provide information regarding the Court decisions according to GEO 17/2012, 92/2012, 103/2013:

amount of the payment obligation for each of the ordinances; amounts effectively paid in each of the years.Answer: The amounts reported as payment obligations during 2012-2014, have been calculated on the basis of the data reported in the balance as provisions and are not broken down on the 3 ordinances. Moreover, the effective paymebts have been foreseen in the budget without being broken down on the 3 ordinances

Table 3A

- Consolidation

i. Regarding loans, the consolidated amount of loans granted is expected to be smaller (or nil) than the sum of loans granted by general governments subsectors. This is not what we can observe for 2014 please see the following table concerning consolidation of loans.

The origin for this appears to be the negative increase in the acquisition of F.42 in table 3B. Please explain and correct where, and if, needed.

Answer: In table 3B in 2014 the increase (+) and decrease (-) of F.42 were corrected to be in line with the decrease which is reflected in Table 3D in line Local government holdings of other subsectors debt (level) (c)(5) but the total transaction on F.42 amounted to the same value of -393.8 million lei.Thank you for the correction.

- Equity and investment fund shares/units (F.5), Increase (+)

i. The acquisitions of equity in Table 3A is not in line with the acquisition of equity in Questionnaire Table 10.1, for all series. Please explain and correct where needed.

Answer: In table 10.1 for all series under total acquisition of equity were included also the amounts representing superdividends. We reconsidered the position of superdividends and reflected it under total disposals for all series. The questionnaire will be revised accordingly and sent to you once again.

In 2011, the difference between the amount recorded in Table 3B (and also in Table 3A) as increase in F.5 and the one included in Table 10.1 of the Questionnaire represents acquisition of quoted shares by Property Fund (reclassified in S.1311 at that time) in amount of 769.84 mil. lei. In table 10.1 only transactions with public corporations are requested and Property Fund was part of the central government at that moment.i. In line 7 of table 10.1, all transactions must be represented, as indicated by the column Reference EDP Table 3. Please align the tables.

Answer: We corrected the table 10.1 in EDP questionnaire accordingly and we will resend it.- Equity and investment fund shares/units (F.5), Reduction (-)

i. The disposals of equity in Table 3A is not in line with the disposals of equity (and privatization receipts) in Questionnaire Table 10.1, for all series. Please explain and correct where needed.

Answer: The difference between Table 3A and Table 10.1 represents the disinvestment of the reclassified companies into S.13 for all series. In table 10.1 only transactions with entities which are classified as public companies in other sectors then S.13 are requested.i. In line 9 of table 10.1, all transactions must be represented, as indicated by the column Reference EDP Table 3. Please align the tables.

Answer: We corrected the table 10.1 in EDP questionnaire accordingly and we will resend it.Table 3B

- Consolidation

i. Please explain the increase in central government subsectors holdings of other subsectors debt in 2014.

Answer: The amount which is recorded in table 3B in line Central government holdings of other subsectors debt (level) represents transactions of currency and deposits of Local Government and Social Security held with the State Treasury Funds from which are eliminated the transactions with deposits held in banks. These transactions are added at the stock of previous year.Thank you for the information.

- Currency and deposits (F.2)

i. Please explain the considerable net acquisition of F.2 in the last four years, amounting to 32.6 billion lei. What is the objective for this accumulation of currency and deposits?

Answer: Please find in the table below the derivation of transactions in F.2 in the financial accounts of Central Government:

- lei billion -

S.1311 F.22011201220132014

Stocks, end of period18.929.635.746.6

transactions5.610.35.710.9

other economic flows-5.50.40.40.0

In the last four years the stocks of F.2 increased by 27.7 billion lei. We do not understand why you are summing the figures for transactions.i. Thank you for the information. Please explain the OEF of -5.5 billion lei in 2011.

Answer: The OEF of -5.5 billion lei is the sum of the revaluation of Central Government deposit denominated in foreign exchange due to exchange rate changes (amounting to -5.453 billion lei) and of other changes in volume (amounting to -0.008 billion lei).

- billion lei -

S.1311 - F.2stockstransactionsother economic flows, of whichrevaluationOCV

201118.9025.602-5.461-5.453-0.008

Answer: The major part of this net acquisition is due to the availabilities in foreign currencies of State Treasury which amounted 6.9 billion Euro, respectively 30.8 billion lei equivalent at the end-2014. The reason to have these availabilities in State Treasury is that starting with 2010, it was agreed with the IMF and the EC to build- up and consolidate a financial buffer in foreign currency (in equivalent of around 4 months of gross financing needs) in order to protect against unforeseen external shocks.We thank you for the information.

- Equity and investment fund shares/units (F.5), Increase (+)

i. The acquisitions of equity in Table 3B is not in line with the acquisition of equity in Questionnaire Table 10.1, for all series. Please explain and correct where needed.

Answer: In table 10.1 for all series under total acquisition of equity were included also the amounts representing superdividends. We reconsidered the position of superdividends and reflected it under total disposals for all series. The questionnaire will be revised accordingly and sent to you once again.

In 2011, the difference between the amount recorded in Table 3B as increase in F.5 and that one included in Table 10.1 of the Questionnaire represents acquisition of quoted shares by Property Fund (reclassified company in S.1311 at that time) in amount of 769.84 mil. lei. In table 10.1 only transactions with public corporations are requested and Property Fund was part of the central government at that moment.i. In line 7 of table 10.1, all transactions must be represented, as indicated by the column Reference EDP Table 3. Please align the tables.

Answer: We corrected the table 10.1 in EDP questionnaire accordingly and we will resend it.- Equity and investment fund shares/units (F.5), Reduction (-)

i. The disposals of equity in Table 3B is not in line with the disposals of equity (and privatization receipts) in Questionnaire Table 10.1, for all series. Please explain and correct where needed.

Answer: The difference between Table 3B and Table 10.1 represents the disinvestment of the reclassified companies into S.1311 for all the series. In table 10.1 only transactions with entities which are classified as public companies in other sectors then S.13 are requested. The same treatment is for S.13.i. In line 9 of table 10.1, all transactions must be represented, as indicated by the column Reference EDP Table 3. Please align the tables.

Answer: We corrected the table 10.1 in EDP questionnaire accordingly and will resend it.ii. Please further explain the disinvestment in 2013. To which stakes/corporations sold does this relate?

Answer: The decrease in F.5 in 2013 is mainly due to the sale of equity in two public companies (TRANSGAZ -322.08 million lei and ROMGAZ -1744.58 million lei) and the withdrawal of equity as the result of the superdividend test (EXIMBANK SA -103.6 million lei, EON GAZ DISTRIBUTIE SA -66.8 million lei and SC Hidroelectrica -34.4 million lei).

Table 3D

- Currency and deposits (F.2)

i. Please explain the increase in the net acquisition of F.2 in 2014.

Answer: Please find in the table below the derivation of transactions in F.2 in the financial accounts of Local Government.

- billion lei

S.1313 - F.22011201220132014

Stocks, end of period4.83.64.35.6

transactions0.8-1.20.51.3

other economic flows-0.50.00.10.0

Please explain the increase in the transactions in 2014.

Answer: The increase in transactions in F.2 in 2014 is mainly due to deposits held by Local Government with the State Treasury, amounting to 1.12 billion lei and with credit institutions, amounting to 0.22 billion lei.Table 3E

No issue.

Table 4

i. In Questionnaire Table 4.1.2, the following items are revised between EDP October 2014 and EDP April 2015, regarding F81 assets/services acquisitioned and not paid, for 2012:

Nevertheless, we do not observe any revision on the stock of Trade Credits and Advances in Table 4. Please explain.

Answer: There were no revisions made between EDP October 2014 and EDP April 2015 only a more detailed explanation was given, in order to highlight the amounts for F.81 regarding payables for Investment projects for National Infrastructure.

- million lei -

EDP Oct 2014EDP April 2015difference

F81 assets/services acquisitioned and not paid155.2155.20.0

Ministries and Self financing institutions S1311190.2107.0-83.2

Public Corporations included in S1311-35.0-161.8-126.8

Investment projects for National Infrastructure Development Plan0210210

Thank you for the information.

ii. Please explain the downward trend in the amount outstanding in the government debt from the financing of public undertakings.

Answer: These are loans for projects contracted before 2008 and they are in repayment period. During last years no new loans were contracted for financing of public undertakings and the stock of debt decreased. Thank you for the information.3 - Questionnaire related to the EDP notification tables

We have the following questions on the tables:

Table 1: Revision of general government net lending (+)/ net borrowing (-) and revision of general government consolidated gross debt

i. You have not provided the breakdown of the revisions in the B.9 in table 1.1.2, but rather reported all as unexplained residuals. Given that the revisions are clearly identified, we would encourage you to provide that detail in this table.

Answer: We could not complete the table due to the fact that cells are blocked and we assumed that is not necessary.

ii. Has there been any revision from October 2014 to April 2015 Notifications regarding a late changeover from ESA 95 to ESA 2010?

Answer: not for Maastricht debt and for nonfinancial accounts.i. Thank you for the information. We understand then that there were changes relating to financial accounts, correct? If yes, please explain which revisions and the reasoning for these.Answer: No revision from October 2014 to April 2015 Notifications regarding a late

changeover from ESA 95 to ESA 2010 took place in the financial accounts either.Table 2: Breakdown of financial transactions included in the working balance

2.1 Breakdown of financial transactions included in the working balance as reported in EDP table 2A

i. Please thoroughly explain the reimbursements of credits related to loans contracted by Ministry of Finance.

Answer: Reimbursements are related to the external loans took over for administration by the MoPF according to art.14 (GEO 64/2007 concerning public debt) starting with January 1, 2009. The categories of loans are:

- loans contracted by the line ministries with the state guarantee, or contracted by the Ministry of Finance and on-lent to the line ministries, for which the reimbursement source is the state budget;

- loans concluded by the Ministry of Finance and the economic operators with the banks, under tri-party arrangements, for which the reimbursement source is the state budget;

- loans contracted by the economic operators and guaranteed by the state, through the Ministry of Finance, for which the reimbursement source is the state budget.

i. Please explain, regarding that those refer to loans, why they are not included in the adjustment line loans, repayments.

Answer: They represent repayments of debt and not loans repayments.ii. Please further explain what are the loans contracted by the economic operators and guaranteed by the state, through the Ministry of Finance, for which the reimbursement source is the state budget, referring their amounts. Please thoroughly explain what guarantees are these.

Answer: At end-2014 there is only one state guarantee for a loan contracted by CNADNR with EBRD with outstanding amount of Euro 15 mil.

ii. Please thoroughly explain the reimbursements of external and internal credits.

Answer: According to Emergency Government Ordinance no. 64/2007, art.14, MOF took over, the debt service for loans contracted by main budget holders with state guarantee or contracted by MOF and on-lent to state own companies or autonomous regies, except those for which in the approval/ratification acts are specified as source of reimbursement the own sources of the beneficiaries or the own sources of the beneficiaries and in completion the state budget. As a consequence, some of the loans are reimbursed by the line ministries from their own budget sources or by the subordinated economic operators.iii. Please explain, regarding that these refer to loans, why they are not included in the adjustment line loans, repayments.Answer: They represent repayments of debt and not loans repayments.2.2 Breakdown of financial transactions included in the working balance as reported in EDP tables 2B-2D

i. Please thoroughly explain the reimbursements of credits of internal local public debt.

Answer: The reimbursements of credits of internal local public debt were registered a significant increase, from 576.2 million lei in 2013 to 837.8 million lei in 2014, due to the increase of the numbers of the loans on a short term contracted by local government units and because of the beginning of the repayment period for the previous concluded loans.i. Please explain, regarding that those refer to loans, why they are not included in the adjustment line loans, repayments.Answer: They represent repayments of debt and not loans repayments.ii. Please thoroughly explain the increase in reimbursements of external credits in 2014.

Answer: These are loans contracted directly by the state and on-lent to local governments authorities to finance different projects (the municipality utilities development, water supply, the industrial development, infrastructure development, the thermic energy, others). There are long term loans contracted before 2008 and now are in repayment period. ii. Please explain, regarding that those refer to loans, why they are not included in the adjustment line loans, repayments.Answer: They represent repayments of debt and not loans repayments.iii. Please explain the repayments of loans contracted to finance projects EU funding.

Answer: The repayments of loans contracted by local government units to finance projects EU funding meaning the repayments of the loans on a short term contracted in order to assure the pre-financing of the above mentioned projects.

iii. Please explain, regarding that those refer to loans, why they are not included in the adjustment line loans, repaymentsAnswer: They represent repayments of debt and not loans repayments.Table 3: Adjustments for sector delimitation in EDP tables 2A-D

Please observe the following information included in Questionnaire Table 3:

The B.9 of the institutions subordinated to these ministries improved by 2.5 billion lei.

i. Please explain what institutions are included in each of those lines and the reasons for the relevant improvement in their B.9 when compared to previous years.

Answer: In the surplus of the Ministry of Internal Affairs of 467 is included the amount of 470 mill lei to the unit ANRSP nat. agency for state reserves as a result of the selling of the stocks from the State Reserve. These revenues had to be used in order to reunify the stocks from the State Reserve but due to the fact that the public procurement procedures have not been finalized, the action has not been finalized in 2014, and would be made in 2015. Please refer to the questions under T2A.

Answer: Table 2A at detail. Public institutions partially or totally financed from own revenues.

Ministry of Environment: In the surplus of 805 million lei there are included collections for 2014 in the amount of 2252 mill lei, mainly from the environment stamp for autovehicles in the amount of 589.5 million lei and water supply in the amount of 958.1 mill lei, the amount of 407 to subsidies, amounts which have not been totally spent. ii. Please refer the Tax name according to national classification as classified in the NTL.

Answer: In the NTL this tax is recorded on row 83. The name Car registration taxes/ "Timbru de mediu pentru autovehicule" recorded as D.214D.The Ministry of Economy in the surplus of 623 mill lei consists mainly from the revenues as a result of selling greenhouse effect gas certificates in the amount of 547 mill lei, an amount that will be used according to the investments programme until 2020. Please refer to the questions under T2A.Answer: In table 2A at Public institutions partially or totally financed from own revenues we present the surplus of these institutions.

For the Ministry of Education 240 mill lei and Ministry of Health 176 mill lei we do not have the necessary information.

ii. Please explain what institutions are included, for both Ministries, under these lines.

Answer: For Ministry of Education - universities, and for Ministry of Health hospitals.ii. In the context of your explanatory note, please explain if the B.9 of these units for 2014 is based in closed account or rather estimation.

Answer: For 2014 B9 of these units is based on their monthly report and are provisional data.

Thank you for the information.

Table 4: Breakdown of other accounts receivable/payable (F.8) reported in EDP tables

i. In items 13a and 13b of table 4.1.1, you record adjustments relating to government foreign claims. Nevertheless, in Questionnaire Table 8.1 we do not observe any registers regarding this. Please explain.

Answer: Following the discussions held during June EDP 2013 dialogue visit, in table 8 there are recorded only financial claims of Central Government classified under financial instrument F.4 Loans. i. Thank you for the information. In fact, Table 8 refers also to other accounts receivable (AF.8/F.8) relating to claims on guarantees. Is this the case? To which financial instruments do these relate?Answer: In the Questionnaire Table 8 there are recorded only the loans contracted by Ministry of Public Finance and on-lent to public companies. No claims on guarantees are recorded under AF.8/F.8.

Table 5: Taxes and social contributions: other accounts receivable/payable (F.8) of general government

No other issue.

Table 6: Recording of EU flows in EDP tables

i. Please refer to the questions in T2A.

Answer: We revised the questionnaire because indeed the amount of 1524.9 million lei was not included in 771.3 million lei. Moreover, we have also included the amount of 564.9 million lei which is reflected on revenues from the state budget in the working balance for the payments of the previous years.

Thank you.

ii. Please explain why you do not record any time adjustments regarding EU contributions.

Answer: According to the EU Regulation no. 1377/2014, by which it has been implemented the Regulation no.1150/2000, Romania has not requested the delay of the payment of balances VAT and GNI the payments being made within the deadline foreseen by the Regulation.

Thank you for the information.

Table 7: Military equipment expenditure (weapons and supporting equipment)

Please refer to the questions in T2A.

Answer: The cash payments for 2013 and 2014 represent advances for equipments (F16 aircrafts) that will be delivered during 2016-2017.

The deliveries are support components of these equipments received previously. The basic components of the equipments will be delivered between 2016 and 2017.

Thank you for the information.

Table 8: Central government claims, debt cancellation

i. Could you please explain the total decrease in the amount of claims against other government sectors in 2014?

Answer: The total decrease in the amount of claims against other government sectors in 2014 is due to the reduction of the Local Government debt granted by Central Government, as shown in Table 3D in line Local government holdings of other subsectors debt.

The reduction of debt amounting 340 mill lei is due to the reimbursements of loans contracted by local governments units according to the Emergency Government Ordinances No. 51/2010 and No. 3/2013 following by the prepayment of principal rates for 2015, according to provisions of article 30 from EGO No. 74/2014.i. Thank you for the information. Please explain the abrupt decrease to zero of the new Local Government debt granted by Central Government.

Answer: These are loans granted according to the special laws as it was mentioned (EGO no 51/2010, no 3/2013 and no. 74/2014). For 2015 it was approved the GEO no 2/2015 according to which new loans will be granted for pre-/co-financing of projects financed from EU funds.

Table 9: Guarantees recording

9.1. Government guarantees in public accounts

i. Item 4, regarding guaranteed debt assumed by the general government in public accounts, does not match with debt assumption in item 4 of Table 9.2. Please explain.

Answer: In item 4 of Table 9.2 for guaranteed debt assumed by GG it is reported debt assumed coming from the repeated called guarantees (ESA rules - 3 times in line) that is not debt officially/legally assumed by government in public accounts and it is not reported in table 9.1 Thank you for the information.ii. Item 10 of this table do not match the total cash repayment of guaranteed debt assumed as seen in column 7 of Table 9.2. Please explain.

Answer: In column 7 of Table 9.2 the reported amounts includes also principal repayments on the guaranteed debt reclassified as central government debt when loans were contracted in the past because the sources of repayment was state budget (they are reported in state budget in working balance). Thank you for the information.iii. Please explain the fall in 2014 in the capital transfer expenditure related to guarantees cash calls.

Answer: The expenditures related to guarantees cash calls decrease in period because principal repayments on the guaranteed debt are made by the beneficiaries of the guarantees from their own resources.

Thank you for the information.9.4 Standardised guarantees

You report now the existence of a new standardised guarantee scheme for supporting SME.

i. Could you please give us further details on this program?

Answer: Program of government guarantees scheme for working capital financing of SMEsThe Government has adopted the Emergency Governance no.92/2013 regarding the Program of guarantees for credits granted to small and medium enterprises. This is a multiannual program aiming to support the development of the SMEs, where the State, through the National Guarantee Fund for SMEs, guarantees the loans for working capital contracted by small and medium enterprises from various credit institutions. Main features are as follows: the maximum amount of the guaranteed loan for working capital is up to RON 5,000,000/SME; loan period - maximum 24 months, with the possibility of additional extension of up to 12 months; the State guarantees up to maximum 50% of the loan principal. Guarantee does not cover any interest, fees and banking expenses; loan interest rate: not exceeding reference rate (ROBOR 3 mths) + 3.5% margin. The ceiling for the state guarantees to be issued was established at RON 2 bln. Currently, there are 20 banks enrolled in the Programme, as follows: Banca Transilvania, Alpha Bank Romnia, Banca Romneasc, Bancpost, BRD - Groupe Societe Generale, BCR, Banca Comercial Carpatica, CEC Bank, ING Bank NV Amsterdam, Bank Leumi, OTP Bank Romnia, Nextebank, Marfin Bank, UniCredit iriac Bank, Volksbank Romnia, Piraeus Bank, Intesa Sanpaolo Bank Romania, Banca Italo- Romena SpA, Banca Comercial Feroviar, Banca Romn de Credite i Investiii. Up to 28 February 2015, 227 guarantees were issued by FNGCIMM, in total amount of aprox. RON 43.15 mil. Thank you for the detailed information.

ii. Could you please explain why no imputed transactions of F.66 relate to this program?

Answer: Under the program First House the value of guarantees issued in 2014 was 2.206,5 lei mill., of which 2% (failure rate assumed) represents 44,1 mil lei (F.66 liability / expenditure recorded in ESA 2010 accounts), while 13,0 mil lei represents F.66/ F.2 guarantee calls, resulting an imputed amount of 31,1 mil lei as difference due to the fact that 13 mill. lei guaranteed calls are already recorded in working balance.Under program for supporting SME the value of guarantees issued in 2014 was 34,6 mil lei, of which 20% (failure rate assumed) represents 6,9 mil lei (F.66 liability/expenditure recorded in ESA 2010 accounts), with 0 mil lei representing F.66/ F.2 guarantee calls and imputed amount of 6,9 mil.lei.Thank you for the detailed information.

i. What is the amount allocated to the scheme relating to SMEs for 2015?Answer: there is no special ceiling for 2015. The total ceiling approved for the program is 2 billion lei, but only guarantees in amount of 43.2 mil. lei were issued from the beginning of the program until end-February 2015.

Table 10: Capital injections, superdividends and privatizations

10.1 Capital injections in public corporations, superdividends and privatisations

i. For 2011, there is an inconsistency in D.9 of S.13 between EDP Table 10.1 and ESA Table 2 of 270 million lei. Please revise where appropriate.

Answer: We revised dataThank you for the revision.

ii. For years 2011-2014, there is an inconsistency in transactions in F.5 of S.1311 between EDP Table 10.1 and ESA Table 27. ESA Table 27 is in line with EDP Table 3B. Please revise where appropriate.

Answer: In table 10.1 for all series under total acquisition of equity were included also the amounts representing superdividends. We reconsidered the position of superdividends and reflected it under total disposals for all series. The questionnaire will be revised accordingly and sent to you once again.In 2011, the difference between the amount recorded in Table 3B (and also in Table 3A) as increase in F.5 and the one included in Table 10.1 of the Questionnaire represents acquisition of quoted shares by Property Fund (reclassified in S.1311 at that time) in amount of 769.84 million lei. In table 10.1 only transactions with public corporations are requested and Property Fund was part of the central government at that moment.The difference between Table 3A and Table 10.1 represents the disinvestment of the reclassified companies into S.13 for all series. In table 10.1 only transactions with entities which are classified as public companies in other sectors then S.13 are requested.Having regard that operations related to reclassified companies into S.13 should not be shown in Table 10.1 we consider there is no inconsistency in transactions of F.5.i. Items 6, 7 and 9 of Table 10.1 refer to all transactions in equity. Please revise this table.Answer: We corrected the table 10.1 in EDP questionnaire accordingly and we will resend it.iii. Please explain the 4.5 billion lei increase in the expenditure of the capital transfers of general government, out of which 3.3 billion lei concerning central government.

Answer: We revised data for D.92 pay. Please see our answer at section 1.2 Consistency with ESA Tables point iii).

i. Thank you for the corrections implemented. D.9 pay still increases considerably please explain.

Answer: The increase of D.9 pay is due to increase of payments obligation resulting from Court Decision on wages right in 2014 compared with 2013. iv. Please explain the absence of data regarding the earnings of public corporations for 2014.

Answer: Public corporation balance sheet is available at the end of May 2015Thank you for the information.v. Please explain the considerable amount of profits, in 2013, of profitable public corporations.

Answer: In 2013 the amount from the profit is due mainly to the main companies OMV Petrom, Hidroelectrica, Nuclearelectrica, Transgaz, Romgaz.

10.2 Capital injections in public corporations, superdividends and privatisations (detail) of S.13

i. Please eliminate the entry regarding capital injections in CNADNR, given that this public corporation is included in S.13.

Answer: Done.

This seems to be still included in