IMF experts estimate fiscal deficits of over 6% of GDP in the coming years due to new pension law


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The IMF delegation concluded its visit to Bucharest. According to the institution’s statement, last year’s tax package was a step in the right direction and creates additional revenue.

The International Monetary Fund had several recommendations for the Romanian authorities:
  • Income tax reform: closing remaining loopholes and exemptions, including by lowering the threshold for micro-enterprises and possibly making income tax progressive.
  • VAT reform: Increasing VAT revenue, including by taxing more things at the standard rate.
  • Green taxes: introducing a carbon tax in the transport and construction sectors or additional excise duties on fossil fuels.
  • Property taxes: Increase property taxation, if possible by implementing the reforms already prepared.
  • The impact of pension reform: developing a mechanism for effectively expanding the tax burden resulting from pension reform.

“Predictability is essential in making and implementing tax policy changes. It would help both firms and households and lead to an improved investment climate. 5. Inflation is slowing but remains well above target. Monetary policy will need to remain tight until there is solid evidence that inflation will reach the NBR’s tolerance band in a timely manner. 6. In 2024 the economy is expected to recover, with growth close to 3%, as consumption – driven by rising real wages – and external demand strengthen. Estimates show that inflation will gradually return to the target range by the end of 2025. However, double-digit wage increases, among other factors, may prevent inflation from normalizing,” the IMF concluded.

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