RO National Bank chief economist suggests public sector wages should be cut by 20%

Romania's budgetary sector employees should work only four days a week and have their wages cut by 20%, Romania's National Bank (BNR) chief economist Valentin Lazea suggested.

The fiscal consolidation emerged as a hot topic on the public agenda, as the country's public deficit will exceed 9% of GDP this year.

"It is not normal at all for the average salary in the budget sector to be higher than in the private sector," says Lazea, according to Profit.ro.

He did not detail on how schools or hospitals should deal with the four-day working week.

A more pragmatic suggestion voiced by Lazea was about the property taxes that should be increased.

Without such measures, the public deficit will exceed 8% of GDP next year (when the Government hopes for a 7%-of-GDP gap), warns Valentin Lazea. The Government has just increased its budget deficit target for this year to 9% of GDP.

On a more moderate note, the Fiscal Council's head Daniel Daianu argued that the fiscal consolidation should indeed begin in 2021 but should be conducted smoothly over three to four years. Steeper fiscal consolidation could trigger a recession, he warned, Ziarul Financiarreported.

The reduction of the public deficit must take into account the restructuring of both expenditures and revenues. Daianu believes that the Government can increase budget revenues.

"It is a false statement that fiscal/budgetary revenues cannot be increased. The tax system must be transparent and fair. [...]The budgetary consolidation, not only fiscal - because it also concerns the increase of revenues as well - would allow Romania to enter the ERM2 mechanism, prior to joining the euro, around 2025," concludes Daniel Daianu.

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