Romania’s deputy PM Turcan assures “pension law will be observed”

Romania’s deputy prime minister Raluca Turcan speaking on November 8 assured that “under no circumstances” will the new Government disregard the pension law, but she did not say whether it would be amended, Newsweek.ro reported.

The state pensions increased by 15% in September this year and they are supposed to rise by another 40% next September, under the pension law.

Daniel Daianu, the head of the Fiscal Council, an independent public body that is monitoring how the fiscal responsibility law is observed, stated recently that the 40% rise can’t be absorbed by the state budget. “Maybe in three, four years, the tax collection could improve by some 2% of GDP,” Daianu said.

The European Commission in its Autumn Forecast, published on November 7, projected 6.1%-of-GDP public deficit in 2021, unless corrective measures are taken. Such corrective measures, under the current circumstances, mean lower wages or pensions as compared to the baseline scenario (including the 40% pension hike).

The governor of Romania’s National Bank (BNR), Mugur Isarescu, said that “we will reach an agreement with the Government to avoid discretionary measures.” He assured that Romania’s budget deficit will not reach 6.1%-of-GDP simply because “this would not be accepted by the foreign markets”.

Isarescu thus somehow implied that the Government will not go ahead with the wage and pension hikes, but he did not explain the political settlement of the deadlock. He explained that definitely “there is no money” to finance the hikes, since the Government is already borrowing to finance the budget deficit.

The public pension budget posted a RON 2.2 bln (EUR 465 mln) deficit at the end of October, deputy PM Turcan announced.

(Photo source: Facebook/Raluca Turcan)