We must keep the budget deficit under control, and we must not jeopardize the withdrawal of European funds or the amounts included in the national recovery plan – Prime Minister Marcel Ciolacu was quoted by the Agrepress news agency from the government meeting on Friday. In his announcement, the Prime Minister stressed the importance of the savings initiated by the state.
Among other things, the government proposed a 1% increase in sales tax for banks and companies with an annual turnover of more than 50 million euros (19.2 billion forints), an increase in the excise tax on alcoholic beverages and tobacco products, and an additional tax on alcoholic beverages and tobacco products. . VAT on some foods and beverages, as well as some sector employees plan to cancel tax incentives.
The Prime Minister stressed that the provisions do not limit the education or health system, as well as investments financed by European funds. He explained that the government will support the completion of more than 2,800 projects funded by European Union funds with amounts taken from the reserve fund.
The cuts were necessary due to the higher-than-expected value of Romania’s budget deficit. Experts estimate the state budget deficit as a percentage of GDP at 6.8 percent, compared to the planned 4.4 percent.
According to the Romanian Ministry of Finance, this represents a deficit of about 20 billion lei.
Romania is currently the only EU member state subject to excessive deficit measures due to budget deficits. The Prime Minister stressed on Thursday that the deficit would under no circumstances reach 6 percent of GDP.
Last Wednesday, the Romanian Constitutional Court described the deficit reduction law as constitutional, dispelling constitutional concerns. The announced provisions caused an enormous negative social response, especially from the cultural sector, which witnessed the restrictions firsthand. Most measures will come into effect on January 1, 2024.