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March 23, 2023

Ialomitianu: Government doesn’t consider VAT cut for food

The Finance Minister added that he does not rule out a salary freeze even against the backdrop of good financial results.

The government is not considering any VAT cut, the option it mulls in case a fiscal relaxation is opportune being that of lowering the level of social insurance contributions, Finance Minister Gheorghe Ialomitianu explained on Friday in reaction to the statements made by Agriculture Minister Valeriu Tabara, Mediafax informs. Ialomitianu argued that he does not want to find himself in the shoes of his Hungarian counterpart who was forced to hike the VAT to a record level in the EU (27 per cent) a few months after slashing several direct taxes.

Concerning the decision to hike salaries and pensions, the Finance Minister stated that it will depend not only on the evolution of budget revenues but also on the companies’ Q1 results, which will indicate whether economic growth will surpass 2 per cent this year. He added that a repeat of the 2008 situation, when a series of salary and pension hikes resulted in the impossibility to cover budgetary commitments, is not desirable.

On the other hand, Ialomitianu did not rule out a salary freeze even against the backdrop of good revenues and good financial results for companies, pointing out that the decision will be taken by the ruling coalition. The alternative option of lowering the level of social insurance contributions in order to stimulate job creation is still being considered.

In other developments, the Minister also stated that Romania will borrow money from the US market this year too, since the first issuance was successful. In what concerns the future issuance, investor perception and extending maturities will be more important than the sum drawn. He continued by pointing out that bond issuances on foreign markets are important because they test investors’ perception of governance and risks associated with economic developments in Romania. The Finance Minister pointed out that the postponement of last autumn’s issuance on the US market was not a failure but a message that Romania is not hard pressed to find financing and is not willing to borrow at any cost.

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