The European Commission (EC) hasn’t reached an agreement with the Romanian authorities on the new Fiscal Code which includes the VAT rate cut to 19%, but the discussions will continue at the ECOFIN Council meeting on July, where Finance Ministers will meet, said Finance Minister Eugen Teodorovici.

The EC worries about the budgetary impact the new Code will have. Ideally, the two sides will reach an agreement on the Fiscal Code, Teodorovici said.

“Whatever the situation, Romania made a clear engagement that it will maintain its commitments in the structural reforms area,” he added, cited by local Economica.net.

Romania will temporarily exceed the budget deficit target agreed with the EC, IMF and World Bank, of 1.2%, as budget revenues will drop after the VAT rate reduction. The estimated budget deficit for 2016 is 2.9% of the GDP. However, the deficit could drop from 2.9% to 2.5% when the Government drafts the budget.

He said that several EU member states have an excessive deficit above 3%, and that Romania must take fiscal relaxation measures to consolidate its economy.

editor@romania-insider.com