Romanian Social Democrats closer to forcing 40% pension hike

The Romanian Parliament's expert budget committees passed the Social Democrats' amendments to the budget revision law, promoting a 40% hike in public pensions starting September instead of the Government's proposed 14% increase.

Technically, the MPs have removed the Government's proposal for a 14% rise while the 40% hike is applicable, in principle, by default under the Pension Law. Finance minister Florin Citu, however, assured that "this will not happen," according to Economica.net.

The amendments passed by the committees on September 16, subject to the final vote expected in a joint sitting of the two chambers on September 23, include other provisions with a significant negative impact on the public finances.

Firstly, the wages of the school teachers should rise this September, instead of September 2021, Digi24 reported. Another amendment regards the allocation of RON 400 million (EUR 82 mln) for the Start-Up Nation program. The commissions also increased by RON 1.5 billion (EUR 310 mln) the amounts distributed from the value-added tax (VAT) collected in 2020 to the local budgets.

If endorsed by MPs in this form and promulgated by president Klaus Iohannis, the budget revision law would push the country's public deficit above 10% of GDP for more than a year. The strategy pursued by the Social Democrats is thus highly risky unless they plan to remain in opposition for another term after the general elections in December.

The financial resources suggested by the Social Democrats to cover the higher expenses are highly uncertain: collect the budget arrears, increase the minimum statutory wage, and create more jobs.

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