Year-end economic measures

The latest economic measures announced by the government in Bucharest

Corina Cristea, 11.12.2014, 15:00

As some of the excitement around the November presidential elections has died out, the public agenda in Romania is now dominated by economic issues. The talks held in recent days between the authorities and the representatives of the country’s foreign lenders have led to an agreement on the key indicators for the 2015 budget: the budget deficit level has been agreed at 1.83% of the GDP, which is higher than the 1.4% target set by the government. The Romanian authorities unsuccessfully tried to reduce the exchange rate taken as reference point for calculating excises in 2015. The International Monetary Fund said it was recommended to have a surplus of budget revenues. As a result, excises will be calculated just as in 2014, at a rate of 4.73 lei for one euro. The minister delegate for budget Darius Valcov said that following the government’s decision to modify the Fiscal Code, excises will be calculated in lei starting next year and updated on a yearly basis starting in 2016 in keeping with the inflation rate:

Darius Valcov : “We chose a calculation method which is already used in a number of European Union countries. We believe we should take as a reference the national currency, and not the euro, and the inflation rate, and calculate the mean of the two numbers, as we have done until now. So the only thing that has changed is the calculation method, we have not used a different rate as a reference. We have just finished talks with the International Monetary Fund and the European Commission and have established this rate together. Initially we proposed a different rate, a lower rate in fact, but in the end we agreed to see next year’s returns before taking such measures, including a reduction in the reference rate for calculating excises, apart from the reduction of the VAT level.”

In the opinion of Darius Valcov, the agreement with the International Monetary Fund will be finalised in September next year, but will not be extended again. He said Romania has a buffer fund of 9.25 billion euros. In the event of a severe economic crisis, this allows the state to cover all its financial obligations, such as public sector salaries and pensions, for 6 or 7 months without having to borrow any money.