Agreement with International Lenders
Announced as difficult and confirmed as such throughout the process, the negotiations between the Romanian authorities and the international lenders resulted in an agreement on next years budget deficit.
Ştefan Stoica, 10.12.2014, 13:54
The Government of Romania has agreed on the main elements of the 2015 state budget with the IMF, European Commission and World Bank negotiators. The budget will be based on a 2.5% economic growth forecast and a budget deficit of 1.83% of the GDP, PM Victor Ponta announced. He made a point of alleviating all fears regarding possible increases of taxes and duties or the elimination of the current or planned social and economic measures. Victor Ponta:
“First of all, there will not be, and the budget bill does not include, any additional taxes or charges in 2015. Obviously the flat 16% tax remains in force. The charge on special construction projects will be lowered from 1.5% to 1% and this has been taken into account in calculating the state budget. It was a fundamental objective. All the current measures targeting economic development or social justice are covered by the draft budget.”
Such measures, the PM explained, include the 5% reduction of social security payments incurred by employers, the tax exemption for reinvested profits, the rise in pension benefits and in minimum guaranteed incomes, doubling the child support benefits for low-income families and the 16% increase of allowances for people with disabilities. PM Victor Ponta said there will be no major pressures on public expenditure, and that funds have been earmarked for co-funding European projects. The Opposition however believes these funds will be cut and therefore investments will be affected. Here is the Liberal Deputy Gheorghe Ialomitianu:
“The bad thing is that we will have a state budget designed not for economic development, but for subsistence, because the increase in expenses operated by the Ponta Cabinet and included in the 2015 budget are not channeled into investments. Investments have been slashed, and the most affected are the investments from the state budget.”
The representatives of Romania’s international lenders have left Bucharest, but issued a brief news release announcing that an agreement in principle was reached on the main points of the 2015 budget. They said the agreed deficit level is in line with the medium-term budgetary goal, while at the same time ensuring the framework for speeding up the European fund absorption. Delegations of the International Monetary Fund, European Commission and World Bank will return in January for a full assessment of the ongoing agreement. The Government intends to present the state budget bill in Parliament on Friday, with Parliament’s final vote on the draft law scheduled for December the 21st.
