Fiscal Policy Talks

The fiscal relaxation measures provided by the new fiscal code are sustainable, while the economic growth can offset the impact of their implementation, in addition to an increased tax collection rate this year, the Romanian Prime Minister Victor Ponta said on Monday.

On the other hand, Victor Ponta claims that unless Parliament passes the code, public sector employees would not be able to benefit from a new salary law.

The Prime Minister says the current dispute on the new code is 100% political in nature.

"Everyone agreed with the fiscal code until the day president Klaus Iohannis sent it back to Parliament for re-analysis. From that moment on everyone started looking for flaws, such as the lack of money. The money is there. Others say a new global crisis is looming. No one denies this, but I don't think the crisis will strike because we lowered our VAT. Others say the increase in the salaries of all public sector employees starting January 1st next year spells disaster. This is a lie. The law provides for a several-year period of transition, while the increase in salaries will be spaced out, within the limits of the budget", Victor Ponta said.

Ponta has thus responded to accusations and warnings linked to the sustainability of fiscal relaxation measures voiced by the head of state, the National Bank governor, as well as international lenders.

The IMF and the European Commission have warned that the simultaneous enactment of such measures could result in serious macroeconomic imbalances.

Most have recommended Bucharest to moderate the rate at which these measures are to be implemented and to revise the spending plans.

Parliament will re-discuss the fiscal code in an extraordinary session at the end of the month. In the meantime, after several days of heated debates, parliamentary parties have agreed to hold talks on the code.

National Liberal Party co-president Alina Gorghiu labeled as "extremely promising" the dialogue between opposition parties and the ruling coalition regarding a project which the political class, the society and businesses all see as critical.

Alina Gorghiu also said that the Liberals would eventually vote for a fiscal code that supports fiscal relaxation measures to a certain extent.