ECONOMY FINANCE&BANKING

Euro Area accession, ever more distant: Finance Ministry set to propose timetable by April 2017

The Finance Ministry has reacted to press allegations that accession to the Euro Area is no longer a priority for Romania. “The Government has not given up on this objective,” Finance Minister Anca Dragu replied. She stated that a timetable of measures that would target the adoption of the Euro will be established by April next year.

“The Government maintains its commitment to adopt the Euro. A concrete date will be set following the drafting of a timetable for the adoption of the Euro, which will be finalised until the next edition of the convergence programme. (…) A comprehensive report and concrete steps are necessary in the following period for the adoption of the Euro, measures that have to be taken in order to raise the Romanian economy’s degree of flexibility and competitiveness. Thus, this report will be authored later this year and up until April 2017, and will include a timetable of measures,” Dragu explained at a press conference.

The Finance Minister also announced that the Government adopted on Wednesday the convergence programme for 2016-2018, which, according to the minister, “is based on the fiscal-budgetary strategy and macroeconomic framework updated for 2016-2018.”

“We estimate a budget deficit of 2.95 percent of GDP, in ESA terms, and of 2.9 percent of GDP next year. A deviation from the medium-term budget objective is expected in 2016 and 2017, mainly as a result of the reduction of taxes implemented through the new Fiscal Code and the hiking of some social security rights, decided in 2015,” Anca Dragu added.

She also explained that the budgetary construction for 2016 took into account the new Fiscal Code, which came into force on January 1, “which has a negative impact of RON 10 bln.”

Dragu pointed out that the measures approved in 2015, which impact expenditures, “mainly through salary hikes and [hikes] in the social security area,” have a negative impact of RON 13 bln.

“For 2017-2019, we likewise consider the fact that the Fiscal Code for 2017, featuring new fiscal relaxation measures that have an impact of RON 7.5 bln and smaller public revenues, will come into force. We have also taken into account the hiking of contributions for Pension Pillar 2 by 0.9 percentage points in 2017, and the coming into force of the draft public sector salary law and of the pensions law for the following year,” the Finance Minister stated at a press conference.

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