Prime Minister Victor Ponta and Finance Minister Eugen Teodorovici meet on Monday with the Romanian National Bank Governor Mugur Isarescu to discuss issues related to Romania’s agreement with the International Monetary Fund (IMF), central bank spokesman Dan Suciu said, quoted by Agerpres.
PM Victor Ponta said, in this context, that the Government will decide these days on the cuts of the Value Added Tax (VAT).
“Last week I informed Romania’s President about the first quarter data in our possession. The new (Finance) Minister Mr. Teodorovici has already talked with our partners from the International Monetary Fund and the European Commission, and we will make a decision today or tomorrow,” Ponta said at the Socialist Democratic Party (PSD) main offices in reply to a question about the VAT cuts.
He mentioned the Government revenue collection is exceeding expectations by far. Ponta said tax administration is much simpler for a standard tax than for differentiated brackets.
The fiscal code draft provides to cut VAT from 24 percent to 20 percent, for all goods and services starting January 1, 2016 and to 18 percent as of 2018. Starting next year also, the standard VAT rate for meat, vegetables, fish and fruits will decrease to 9 percent.
However, PM Ponta repeatedly announced that there is the necessary fiscal space so as to reduce VAT early this summer, or the standard rate from 24 percent to 20 percent, or the share for food to 9 percent.
Regarding the agreement with the IMF, this is suspended, given that the Romanian authorities and the representatives of external lenders have not reached a consensus in the most recent assessment mission. The current accord should be completed by September this year.
According to sources quoted by hotnews.ro, the Governor showed interest in the fiscal space created by the increasing revenues to the state budget, as the PM confirmed that the state has about RON 3.5 billion surplus, money that would cover this year’s “gap” left by the envisaged VAT cuts. According to the sources, the Governor has suggested that the government projections should cover several years, not only in 2015, because, once adopted the steps to reduce the VAT, it would be extremely difficult to give it up if the collecting records temporary “surplus” only some years (pre-election years). The measure seems to be confirmed, following that the date on which it would be applied is to be announced by the prime minister.