President Iohannis blocks alignment of social benefits to inflation

Romania's president Klaus Iohannis returned to Parliament the bill supposed to increase by 140% the benchmark index used to calculate social benefits (ISR). The raise is supposed to take place gradually over the next three years, starting January 1.

The previous Parliament passed the law, which was promoted by now opposition Social Democrats (PSD) and their allies ALDE and Pro Romania.

The 140% increase might look excessive, but it is an adjustment for inflation over the past 12 years - according to Profit.ro.

Cursdeguvernare.ro claims that the index was set up in 2012 and has remained at the initial value of RON 500 since then.

Labor minister Raluca Turcan mentions, in her comment about ISR draft law, that it has not been increased since 2015.

"Regarding the ISR index, which has not increased since 2015, we can say that we are determined to increase it, but this must be done not on an electoral note, as it was the case with the draft law voted in the Parliament, but following a real debate. I will propose this to the members of the Cabinet when we have to decide on this subject," said Turcan.

The ruling Liberal Party (PNL) referred the draft bill to the Constitutional Court, arguing that it didn't "observe the purpose originally set" and failed to indicate the source for financing the higher social benefits. The Court rejected the objections, though.

Now, president Iohannis expects the Parliament, where the Liberals hold a fragile majority, to reconsider the draft law and accommodate it with the budget planning. The benefits can be increased only if the budget planning allows this, president Iohannis argued.

Under the draft law, ISR should increase by 56% as of January 2021. The authors of the draft law estimate the impact on the budget at RON 0.23 bln (EUR 47 mln, 0.023% of GDP) in 2021, RON 0.17 bln in 2022, and RON 0.17 bln in 2023.

(Photo source: presidency.ro)