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December 4, 2021

Gov’t – IMF, final talks today

The opposition parties on Wednesday met the envoys of international financial institutions, during which they criticised the policies of the Executive and promised their own programme.

The government has today the last meeting with the delegation of the European Commission, International Monetary Fund and World Bank, which began the third evaluation mission of the stand-by accord on June 2.
“It is important to meet the main goal, which is a fiscal relaxation in relation to labour taxation, within a reasonable time interval. (…)”, PM Victor Ponta said at the beginning of the cabinet meeting held yesterday.
Wednesday, the leaders of PDL and PNL Vasile Blaga and Klaus Johannis, together with representatives of the two parties, had a joint meeting with the members of the IMF delegation, during which they criticised the policies of the Government, which they accuse of having an approach targeted on electoral measures, and the opposition announced that it is working on its own economic programme that will be presented to the financial institutions.
The interim president of PNL, Klaus Johannis said that the Executive has “no concept of governance.” “We do not understand precisely which way the government wants to go. Such a measure which is exceptional in itself, but brought in a context that raises many doubts, is the reduction of the CAS by 5 pc. It is a measure which we proposed, it is a measure we believe in, and think will improve the climate of the real economy. Given Romania has the lowest salaries, but the labour cost is high, it occupies the 7th position in the European Union – 44.8 pc – a reduction of labour cost is needed. (…) We are worried by the fact that the Ponta Government did not prepare this measure and does not come with a convincing project, it comes at the middle of the year. We believe this is an approach clearly targeted on electoral measures,” Johannis mentioned.
The PNL leader added that even the measure of tax-exempting the reinvested profit was wrongly enforced by the government. He affirmed that it is not enough to mention in the regulations that profit may be reinvested, in the conditions set by the Government, because the time is too short until 2015 in order to be a predictable measure. The leader of PNL said that the PNL-PDL delegation informed the IMF officials that it is drafting a joint economic programme that will be presented during the next visit paid to Romania by the envoys of the international financial institutions. He affirmed that the joint meeting of PNL and PDL with the IMF delegation represented a first public signal about the construction of a new centre-right party through the merger of the two parties.
“I hope that (the representatives of the opposition) have not changed their opinion, especially the former liberal colleagues, and support the government in the effort we made to relax the fiscal regime, given the very good data we received since the beginning of the year about economic growth, reduction of the deficit and of budgetary spending,” Ponta said at the beginning of the cabinet meeting. Meanwhile, PM Victor Ponta on Wednesday hailed the positive effects triggered by the improvement of Romania’s country rating, showing that our country’s CDS has reached a historic low.
‘The improvement of Romania’s country rating has already triggered positive effects! Our country’s CDS (credit default swap) has reached an historic low yesterday: 128 basis points. Which shows that the international markets and the investors have trust in Romania!’ the Prime Minister said on its wall on the social networking website Facebook.
In another context, the Chamber of Deputies on Wednesday passed the bill on the ratification of the Letter of Intent and Annexes thereto signed by the Romanian authorities in Bucharest on March 5 and approved by Decision of the IMF Executive Board on March 26.
According to the latest official statements, the reduction of the CAS by 5 percent points was the top priority of the government in the negotiations with the IMF. Indeed, lowering social contributions has a particular importance, given the sacrifices made by the Executive of Bucharest to obtain the acceptance of the IMF. The tax on special buildings, the supplementary excise of 7 eurocents/litre of fuel and the expansion of the basis of CAS payers were also topics of interest.
The reduction of the CAS would mean a budgetary “gap” of RON 2.6 bn, strictly in accounting terms, but if we the positive effects of this incentive are taken into consideration, the impact would drop to RON 1.5 bn, according to analysts quoted by adevarul.ro.

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