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May 19, 2021

PM Ponta: Gov’t still supporting VAT cuts, increasing teachers, healthcare staff pay, despite IMF opposition

Romania is a success story as far as the relationship with the International Monetary Fund (IMF) goes, but right now there are two divergences between the two of them, namely cuts in the Value-Added Tax (VAT) and increasing pay for teaching staff and healthcare staff, both of which are still supported by the Romanian Government, Prime Minister Victor Ponta told a press conference on Friday at the end of a meeting of the Government.

“Even from their points of view, Romania is categorically the country that got the best, most remarkable, positive progress under previous programmes. If we think that we started in 2009 from an 8-percent deficit coupled with economic decline, and now we have the biggest economic growth, with 400,000 jobs reclaimed from the lost ones, the rating of the international agencies, Romania categorically is a success story,” Ponta explained.

He added that the only diverging opinions were a 9-percent VAT cuts for food this summer and a cut to 20 percent, from 24 percent, in the general VAT, and increasing the pay for the teaching staff and the healthcare staff by 25 percent in each case. “This is not a matter of negotiation or dissatisfaction. It is a matter of vision. From the point of view of the incumbent government, the VAT cut is an essential element of the economic reform, of our economic recovery and we continue to support it. Likewise, as far as the incumbent government is concerned, when there is economic growth, more money for the budget and development, you cannot say you do nothing with that. You have to try first with the fundamental fields. And healthcare and education are fundamental areas. Pay in these areas is unsatisfactory anyway. (…) But this is a message, a strategy, a way of thinking, along with the infrastructure investment, with what we have done for the healthcare when introducing the healthcare card and in the education area with completing schools and academic autonomy. These two points, I and the Cabinet I represent, continue to support,” added Ponta.

He also said that Parliament will decide whether or not to support the vision because it will be included in the 2016 budget, which will be built on a government deficit that in no way will exceed 3 percent of the Gross Domestic Product (GDP), yet it will be past 2 percent.

The Prime Minister also mentioned the issue of governmental bonds Romania released for the international financial markets two days ago. “Romania has issued 10- and 20-year Eurobonds for the private market. We got the lowest interest in history and it was oversubscribed three times. We wanted two billion euros, while they [the investors] wanted to give us six billion. Should they not trust Romania, they would not lend us their money, a clearer signal from some smarter people that care about their money…,” said Ponta.

Read also : Gov’t doesn’t like IMF. And vice versa.

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