PM Ciolacu confirms risk of budget deficit crisis

Prime Minister Marcel Ciolacu confirmed, on Friday, that they are discussing, at the level of the Coalition, about the increase of some taxes, including VAT, more precisely about the waiving of the 5% VAT for a series of activities and services, because Romania is in excessive deficit procedure and risks losing European funds in the spring of next year.

The Minister of the Economy, Radu Oprea, had declared on Thursday, at the Interviews, that due to the excessive deficit, following discussions with officials from the European Commission, in 2024 we risk running out of European money if we do not fall within the assumed budget deficit.

The European Commission requested that Romania give up the tax exemptions currently granted for many services and economic activities, so that there are only two VAT rates, and not 3, as they are currently – 5%, 9% and 19%. “In my discussion with the European Commission – they are right… There must be an order, you cannot come up with 7 types of VAT. “Decide on one”. We agreed that 9% remains for food, medicine, prostheses… Forgive me, why is there 5% VAT at the clubs? It’s normal? There are far too many exceptions in Romania, something that was not only told to us by the Commission, but by all the financial forums”, declared Marcel Ciolacu on Friday.

He confirmed the danger that, if the hole in the budget is not covered, Romania will lose European funds. “What do we want? Shall we lose all European funds and let Romania enter a collapse? I will not do this, regardless of what voices will appear”, said the head of the government.

He referred to their coalition partners from the National Liberal Party (PNL) who are opposed to tax changes and the removal of exemptions granted for areas such as IT, construction and agriculture. The Social Democrats accuse those from the PNL of having created the excessive deficit, during the period when Florin Cîțu was prime minister.

The Minister of the Economy, Radu Oprea, stated, on Thursday, at Interviurile, that during the Cîțu Government, Romania borrowed more than it was possible to support from an economic point of view and that the money was wasted.

On Monday, the coalition will analyze a package of fiscal measures, including the elimination of some fiscal facilities, desired by Prime Minister Marcel Ciolacu, in the context in which the losses resulting from the granting of fiscal facilities would amount to 64 billion lei. VAT would remain reduced, at 9%, for food, medicine and HORECA services. Taxes will also increase for vices and luxury products, as well as for homes more expensive than 450,000 lei.

The fiscal amendments would also concern the taxes paid by large companies, but the discussions in the Coalition are difficult, because the PSD and the liberal Minister of Finance, Marcel Boloș, support the making of these decisions, while the PNL opposes it, even criticizing its own minister.

budget crisisbudget deficitcoalitiondangereconomy ministerEuropean CommissionEuropean Fundsexcessive deficitincreasePM Marcel CiolacupnlpsdtaxesVAT
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