IMF mission in Bucharest

An IMF mission travelled to Bucharest on Monday to analyze recent economic and financial developments and to review the macroeconomic forecast.

Corina Cristea, 30.01.2024, 13:50

Bucharest does not have a financing agreement with the IMF at present, but representatives of the international financial institution carry out regular missions in all member states, and these days they are in Romania. It is a regular consultation mission, based on the relationship that Bucharest has with the IMF, an institution that estimated an economic growth rate of 2.3% for Romania in 2023 and a budget deficit of 6% of the GDP and which recommended the authorities to carry out additional reforms accounting for 2% of GDP.

In a press conference held at the end of the previous visit, in the fall of 2023, Kees Martijn, who leads the IMF mission in Bucharest, said that the tax package adopted by the Government at that time was a step in the right direction. However, other reforms are also needed. Tax reforms are needed to increase revenues, efficiency and fairness, the financial experts said, explaining the most important measures that the Bucharest authorities should consider were the elimination of exemptions, privileges and remaining loopholes, a further streamlining of the VAT, the implementation of reformed property tax and the use of fiscal policy to promote the efficient use of energy and, more broadly, to encourage the transition to a carbon-neutral economy.

The new tax package broadens the tax base and improves revenues, for example by eliminating exemptions for employees in agriculture, construction, food processing and IT, while the increase in the tax on micro-enterprises would lead to an increase in tax revenues, the representatives of the international financial institution also said. At the same time, it is estimated that the inflation rate will go down from 7% to 4% at the end of 2024, but remains above the target of the National Bank of Romania.

The current consultations of the IMF mission include numerous meetings, such as the one with the Minister of Labour, Simona Bucura-Oprescu, with whom the recalculation of pensions will be discussed. The minister has announced that in the months of May-June pensioners will start receiving pension recalculation decisions at home, and that the payment of the new amounts will be made in September, when over three million pensioners in Romania will benefit a second increase in pensions this year. No pension will go down, the minister has specified, adding that the new pension law brings respect for Romanians, in the sense that if they retired in different years, under different pension laws, but contributed the same, there will be equal pensions for equal contribution and work. The IMF mission in Romania ends on Thursday, February 1st, when a meeting with Prime Minister Marcel Ciolacu and the Minister of Finance, Marcel Boloş will be held. (EE)