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Experts from the International Monetary Fund (IMF) are recommending modifications to the recently adopted pension law by the Government. According to government sources cited by Agerpres, the IMF estimates that the expenses resulting from the implementation of the new pension law will be approximately 0.5% of the GDP in 2024 and an additional 1% of the GDP starting in 2025.
The IMF mission, following its visit to Romania, is preparing the final Article IV report on the financial situation of Romania, which will be presented to the board. In light of the new pension law, the report will include a paragraph emphasizing that “the projection presented in the report does not include the expenses resulting from the application of the new pension law, estimated at approximately 0.5% of GDP in 2024 and an additional 1% of GDP starting in 2025,” as stated by the source cited by Agerpres.
Additionally, it will be mentioned that these additional expenses imply a deficit trajectory inconsistent with fiscal consolidation and achieving the 3% of GDP target.
The cited source further highlighted that IMF representatives emphasize the need for the component of the law involving these expenses to be “reconsidered, or the implementation of the law in the proposed form to be reconsidered.”
The controversial pension law project, approved by the Executive on Thursday, has sparked debates within the Coalition. According to the Minister of Labor, Simona Bucura Oprescu, 2024 will be the first year in which a government will grant two pension increases—one based on inflation plus 50% of the real increase in the average gross wage, and the other through recalculation.
She stated on Thursday that the additional impact compared to the increase in the current law, with recalculation from September to December 2024, amounts to 10 billion lei.
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Romania does not have a large Dept to GDP ratio. So, we do not care when the IMF speaks.