Romania's Govt. speaks of cutting public payroll but has higher taxes in mind

The disappointing budget revenues, EUR 0.8 bln below target in Q1 according to finance minister Adrian Caciu, will force Romania's Government to either lower the number of employees in the public sector or "change" their wages, minister of investments and European projects Marcel Bolos told Antena 3 TV station on April 8, G4media.ro reported.

Extrapolated for the whole year, the budget revenues would fall RON 20 bln (1% of GDP) short of the target, pushing the public deficit to 5.4% of GDP.

Minister Bolos also mentioned the scenario of "reviewing" Romania's fiscal policy [bluntly said: hiking tax rates or adding new taxes]. "We also have the alternative [scenario] of a better tax collection or to review Romania's tax policy," he said.

Marcel Bolos also mentioned the reforms pledged by Romania under the Resilience Facility's national implementation PNRR – the special pension reform (deadline: end December 2022), the public pension reform (deadline: March 31, 2023) and the public pay reform (deadline: June 30, 2023).

Minister Bolos rather blamed finance minister Adrian Caciu for his statements, warning that the EC might actually require Romania to stick with its promises and implement the reforms.

"The first quarter came with lower budget revenues from state institutions, [the revenues] marking a loss that reaches over RON 4 bln [EUR 0.8 bln]," finance minister Caciu said in a press conference blaming it on the tax collection agency ANAF. He accused the excessive hiring in the public system apparatus.

Speaking of missed milestones, minister Bolos explained in another statement on April 6 that failure to complete the special pensions reform would result in non-disbursement of EUR 1.4 bln. Initial estimates indicated about EUR 700 mln.

(Photo source: Gov.ro)