Budget rectifications

A deficit of 2.2% of the GDP, down as compared to last year, and an economic growth also of 2.2% are the indicators for the new budget structure set by the authorities in Bucharest. The figures came after the latest negotiations, the Romanian government had had with an economic troika of the IMF, the World Bank and the European Commission. This scenario, which includes pension and pay rises, also aims at bringing more money to the budget and for this reason new price hikes have been considered.

Prime Minister Victor Ponta explains. “We are going to levy a tax on special constructions – it’s not about houses, it’s about legal persons and civil buildings of a certain type; there is also a 25% increase of royalties for mineral resources with the exception of gas and oil and a 7 cent excise per liter of fuel.”

The new budget rectification includes a 3.76 % pension increase. Other provisions concern investment to reach 6% of the GDP, and the minimum wages are to be raised in two stages – up to 850 lei in January to reach 900 lei on July 1st. Prime Minister Ponta has mentioned the existence of a special fund for pay rises in state-owned institutions, to benefit junior teachers and medical interns in particular. Liberal Crin Antonescu, co-president of the ruling Social-Liberal Union admits that some tax increases could not be avoided, but he has hailed the keeping of a 16% flat tax in the negotiations with the lending institutions.

”These taxes are burdening the people’s purchasing power, but there are two things to say here: it’s not about taxes, something to hinder economic growth. On the other hand, the excise rise will bear on development, I am speaking about the construction of regional roads and motorways.”

Andreea Paul, deputy-vice president of the opposition Liberal-Democratic Party, has lashed out at the new budget.

”Victor Ponta is irresolute over the budget development next year as it has been built on a low economic growth and on expenditures that are still uncertain.”

A cut back on social security contributions as of January 1st 2014 has not been agreed upon with the IMF, but there is the possibility of reducing them by 5% as of July, only provided the government identifies the necessary resources so that the budget may not be affected.