Finance minister: Romania can’t afford to cut social security contributions

The social security contribution (CAS) cut by 5 percentage points, which has recently been approved by the Senate, would deprive the state budget of some RON 7.7 billion (EUR 1.71 billion) per year. There is no room for such a measure in 2017, according to finance minister Anca Dragu. Romania is already expected to reach a budget deficit limit of some 2.8% of its GDP next year, without the CAS cut, according to the finance minister. “We must start a gradual fiscal consolidation process and there’s no room for such a big revenue decline,” Dragu explained, reports local Agerpres. Local economist Ionut Dumitru, the president of the Fiscal Council, a consultative authority, thinks that the social security contribution cut is a good measure that comes at a bad time. He said that such a measure would have been better than the aggressive VAT rate cut, considering the high increase in domestic consumption. The Senate approved a 5 percentage point cut in the social security contribution rate on Monday. However, the Chamber of Deputies has the final say on this project. editor@romania-insider.com