Sources close to talks with the World Bank have stated for cursdeguvernare.ro that the Finance Ministry notified the financial institution in November 2018 that it does not want any longer to complete the ANAF reform project started in April 2013.
That means the Ministry of Finance:
- Gives up EUR 52 million, the amount that it could further obtain on the project
- will reimburse the amount spent so far (about EUR 18 million, plus the related interest) without any results in increasing the tax collection rate and any noticeable effects in the relationship with the Romanian taxpayer
- will remain, until further reform promises, with a messed up digitalisation: the ANAF site has got to breaking down several times a week and the millions of euros taken from the WB went so far exclusively on consultancy services
To be mentioned: the information that the Ministry of Finance decided to stop the tax authority reform project implemented with World Bank was not communicated to the Romanian public.
The World Bank was officially notified on 19 November 2018 by the Romanian Ministry of Finance, which, on behalf of ANAF, requested the cancellation of the credit line worth EUR 52 million, the amount left available of the total of 70 million approved for this project.
cursdeguvernare.ro sources state that the request was justified by the „change of circumstances and the approach vision” on the implementation of ANAF’s information system – the essential component of the reform project.
The following reality is hidden under the diplomatic wording: The Ministry of Finance refused to let ANAF have the IT capabilities aimed at centralizing the financial data from the whole country and instead develops the capacities of a National Centre for Financial Information, a structure included in the central office of the Ministry of Public Finance.
Following the request received from Bucharest, the Bank has decided to officially end the project on 31 March 2019, the date by which an audit will be conducted.
The Ministry of Finance spent over EUR 18 million of the World Bank credit. Even Ionut Misa, Minister of Finance at the time of the declaration, later head of ANAF, explained in 2018 how the money was spent: no single RON on the IT system, all on consultancy. An exaggerated statement, but not far from the truth.
In 2018, the Government of Romania was already starting to repay the EUR 70 million loan contracted with the World Bank, with a first instalment of 7.1% of the principal amount paid in October.
History of a failure carefully supervised by political decision-maker
ANAF reform project was approved in 2013 by the World Bank. The project started very hardly, and the first alarm signals were drawn by the financial institution in 2015.
The reform process was sabotaged by the Romanian party almost immediately after approval, and all USL/PSD governments from period 2013-2015 and those formed by PSD/ALDE after 2017 allowed ANAF heads to slow this project down to a standstill.
In 2016, the World Bank decided to extend the project by two years – which was initially scheduled to end in May 2019 – after seeing the lack of political will to reform the tax authority.
The project has been for some time in a clinical death and maintained alive just to allow the Ministry of Finance to pay for some consultancy contracts.
Gelu Stefan Diaconu was the ANAF chairman who decided that before the institution gets to ease the taxpayer’s life, it first needs new headquarters, both for the employees of the central structure and the installation of the IT infrastructure. The funds that Diaconu has been waiting for: EUR 26.93 million for headquarters and EUR 13.96 million for the data centre. Plus VAT.
At the beginning of 2018, in March, Minister Eugen Teodorovici was asked whether there is any danger of renouncing the World Bank project as its implementation was far from the timeline.
Eugen Orlando Teodorovici replied: „No, we shall actually announce in the next period the final solution that the Ministry of Finance will decide concerning the IT area. Without a clear reform, without fixed steps, things cannot change; they remain as they are …”
In October 2018, the World Bank had yet to find out what the Government’s intention was. „The project activities have been suspended in the last 12 months, and the Bank has not made any further payments” – this was the official announcement of the World Bank.
