Austerity measures to continue in 2011, new taxes foreseen

Pensions will be frozen, while public salary rises in limbo. Cabinet rejects Ro­ma­nia’s zero economic growth alternative for next year.

The rise in minimum salary, pensions frozen at current levels and day labourers going to be charged income tax are the measures government will take in 2011, Premier Emil Boc said on national television Friday. “In 2011, there will be recovered a major portion of the salary loss in 2010. (…) All the surveys by the International Monetary Fund (IMF), EC and the World Bank show Romania will post an economic growth of 1.5-2 per cent in 2011. “We must have sustainable salaries and prices ,” the PM said, who, however would not specify the percentage rate by which public sector salaries will rise from the current level.

“We must understand we can only give what this country can afford to,” Mr. Boc said.

Speaking of pensions, the head of government said they would be frozen next year at the current levels making the point they would not be diminished. “We can’t divide poverty forever,” Premier Emil Boc said. The final decision on salary rises will be reached this week and will also take into count the salary law and talks between coalition partners, the PM also said, who also rejected the possibility for Romania to post no economic growth in 2011, if government “does what it needs to do”.

According to the head of the Executive, fighting tax dodging is government’s top priority, along with the drawing of European funds.

“It is Romanians we are dealing with here and unless we change our mentality, we will continue having problems. We have amended the law and I will see if this translates in more money flowing into the state budget,” the premier also stated. Emil Boc pronounced himself in favour of a draft law stipulating taxes being levied on day labourers as a black labour deterrent. “If all of us work underground, then, we shouldn’t demand either pensions, social assistance or health care. Everybody shall pay income tax, bigger or smaller,” the prime minister concluded.


Premier Boc rose in defence of the minimum tax scrapped as of October 1, saying it was “a measure that produced the effects sought in its time, to take out of the market sham-dealing companies, namely those passive enterprises doing fictitious transactions,” The PM estimated that 80 per cent of the companies that went out of business on account of minimum tax, which employer associations say are close to 100,000, “vanished on the basis of that criteria alone: that some were active and they had to opt for a different solution.” “Everybody speaks of restaurants, boarding houses as the fields with the highest tax dodging. They will be identified and levied one form of taxation or another, on an individual basis,” the premier affirmed. In draft stage also, more measures part of the anti-crisis package announced by Premier Boc, among which, a lower value cap for investments by companies eligible for government assistance equal to 50 per cent of the investment value for the companies that inject a minimum of EUR 5 M into a business, and a regulation stipulating the likelihood for the forced execution to be suspended for companies to which the state owes money. Premier Boc explained that government is going to provide assistance to entrepreneurs of up to 35 years age for developing their business. Government pledges to make job creation and absorption of European funds its top priority next year, with the premier saying emphasis will be put on supporting business environment. Having met with trade union delegates, Premier Boc mentioned that business environment and economic development “should not fall victim to negativism,” although the “hard part is yet to pass”


Government will look into the recommendation made by the World Bank as part of the foreign loan agreement.

“We have analysed the current stage of the accord with the World Bank. On Tuesday, we will hold a meeting to examine the WB’s recommendations for Romania’s Government as part of the accord we struck with international structures,” PM Emil Boc said, having met with the WB delegation. He also outlined that Saturday’s talks at Victoria Palace did not approach the likelihood for Romania to enter a new foreign loan agreement. “This issue has not been approached,” Boc pointed out.

Boc: Rompetrol Must Pay The Entire Debt

While on a national television programme Friday, Premier Boc cautioned that government will take the Rompetrol case to court unless the company fully pays the debt it owes to the Romanian state. According to the PM, the Finance Ministry and the National Agency for Fiscal Administration (ANAF) have already been empowered to start judicial proceedings into the case. “Rompetrol must pay the entire debt. We will go to court, what it has done is illegal,” Boc said. Actually, the premier had announced as early as Friday morning the Romanian state will challenge in court Rompetrol’s actions. The state has again acquired a 44.69 per cent stake into Rompetrol after the conversion into shares of some bonds the KazMunaiGaz-controlled company failed to redeem by the deadline of Thursday, September 30. The Rompetrol Group therefore holds 42.4905 per cent of the share capital of Rompetrol Rafinare, and other shareholders – 12.8136 per cent. Rompetrol had to pay the Romanian state a EUR 570 M debt against which bonds were issued in 2003 and due to mature on September 30, 2010.

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