September 25-29, 2023

A roundup of the week's main stories

Mihai Pelin, 30.09.2023, 14:00

Government takes responsibility for fiscal measure package

The ruling-coalition government in
Romania on Tuesday took responsibility in Parliament over a comprehensive
reform of taxation and budgeting, the most sophisticated of its kind in recent
years. Among other things, the package provides for preserving a small added
value tax for foodstuffs, medicine and firewood as well as for an increase in
the national minimum wage to 660 EUR. At the same time, the law introduces
additional taxes on the profits reported by banks or large corporations. All
goods obtained from illicit activities will be seized, whereas sums that have
no legal justification will be levied an additional 70% tax. According to the
new measures, workers in the IT sector with salaries exceeding 2,000 EUR will
pay taxes, while public sector employees with salaries above 1,600 EUR will no
longer receive holiday vouchers or food stipends. A special tax will be levied
on people owning properties whose market value exceeds 500 thousand EUR,
provided they don’t pay bank installments. The reform also introduces a minimum
tax on turnovers, a reduction of management positions in the public sector or
capping certain bonuses. The Economic and Social Committee has warned that introducing
additional taxes in order to balance the budget deficit could result in adverse
effects. USR and the Force of the Right in the opposition have decided to refer
the law package to the Constitutional Court.

Senate Speaker Nicolae Ciucă in Ireland

Senate Speaker Nicolae Ciucă this
week attended the European Conference of Presidents of Parliaments representing
Council of Europe Member States, an event hosted by Dublin. In his address, the
Romanian official said that, in the context of the war in neighboring Ukraine,
the role of national parliaments in the reconstruction of Ukraine and the
challenges to representative democracy in times of instability are topics of
great interest for Romania as a member of both the EU and NATO. Romania will
continue to support Ukraine’s process of reconstruction, which should go hand
in hand with reforms designed to strengthen civil rights and liberties, Nicolae
Ciucă went on to say. The topics discussed included the fallout from Russia’s
war of aggression in Ukraine and the role of national parliaments in the reconstruction
of Ukraine and the challenges to representative democracy in times of
instability and equality and diversity in public representation.

Coordination amidst Russian attacks on the Danube

Romania, a country that shares 650
km of border with Ukraine, is in permanent contact with NATO allies, discussing
developments on the border, after discovering several drone fragments, most
likely Russian-made, close to the Ukrainian border in the Danube Delta. Such an
incident occurred earlier this week in the village of Orlovka, where drone fragments
landed close to a ferry transporting Romanian citizens to Isaccea. In the wake
of this incident, the Romanian Defense Staff organized a videoconference with
representatives of public authorities from the counties of Brăila,
Constanţa, Galaţi and Tulcea. The agenda included an overview of
security issues, the army’s public communication processes, initiatives to
prepare the local population, the economy and territory in case of attacks, as
well as the legal responsibilities of various national defense institutions. On
the other hand, the Ministry of Defense called on Parliament to approve the purchase
of 32 F-35 fighter jets from the United States, that should help develop and
maintain Romania’s robust and resilient defense capabilities. The Romanian Army
will have to pay 6.5 billion USD, which will be used to purchase aircraft,
engines, logistic support as well as the training of pilots, auxiliary
personnel and flight simulators. Last year, Romania decided to purchase 32 second-hand
F-16 jets from Norway, which will be added to the 17 F-16s bought from Portugal
in 2016. Romania has increased its defense spending from 2 to 2.5% of the GDP
this year.

IMF experts, on a new mission to Romania

A team of IMF
experts is in Bucharest until October 4 to conduct their annual assessment of
Romanian economy. International experts will discuss economic policies and the
latest developments in this sector with representatives of the Finance
Ministry, the Central Bank and government agencies. On the other hand, the
European Bank for Reconstruction and Development has downgraded its forecast on
Romanian economy in its latest report. Therefore, Romania’s GDP growth is
expected to stand at 1.8% in 2023, down compared to the previous estimate of
2.5%. Economic growth is expected to stand at 3.2% in 2024. Budget deficit will
reportedly stand at 7% of the GDP this year, higher than the original forecast
of 4.4%, the report also shows. (VP)