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Analysis : Romania’s accession process to OECD would determine acceleration of the reforms and the absorption of the EU funds
Romania’s accession process to the Organisation for Economic Co-operation and Development (OECD) would determine the acceleration of the reforms and, implicitly, the absorption of the EU funds, shows an analysis signed by Bogdan Barbu, partner Fiscal Services, Deloitte Romania.
The author considers that, for the coming period, in Romania there are expected necessary regulations for the implementation of the two pillars of international fiscal reform in the agreement obtained in 2021 by OECD and signed by almost 140 countries in the world, including Romania.
According to the analysis, both through the EU and independently, Romania is anchored in the international fiscal reality, shaped according to the OECD recommendations. As a consequence, the author says that there are no significant changes to be expected at this level once we get the statute of fully-fledged member but, “it would be expected that the Romanian authorities get actively involved in the process of elaboration of the recommendations with global impact’.
On the other hand, Bogdan Barbu states that belonging to the club of the most developed countries in the world (at present, the organisation has 38 members, the majority European states, which own over 70% of the production and commerce at global level and 90% of the direct foreign investments) would have a strong, positive impact on the country rating and would determine the drawing of a higher volume of foreign investments. Moreover, the process of accession would itself determine the acceleration of the reforms and, implicitly, the absorption of the EU funds so necessary for this purpose.
At the same time, the author notes that the opening of negotiations for Romania's accession to the Organization for Economic Cooperation and Development (OECD) is proof that the Romanian economy has moved in the right direction in recent years At the same time, the call for integration comes with a number of conditions, particularly with a view to speeding up structural reforms, which should create the basis for catching up the development gap with the organization's Member countries.
The author says that, when the negotiations were announced, the organization published a comprehensive report on the state of the Romanian economy, the results achieved in recent years, the way it crossed the pandemic period, as well as the remaining vulnerabilities and their potential effects in the medium and long term. To temper them, the OECD has also issued a set of recommendations to the Romanian authorities.
Mainly, representatives of the organization argue that national authorities must focus on an effective implementation of Romania's National Recovery and Resilience Plan (PNRR) by improving administrative capacity and carrying out the necessary reforms, focusing on restoring productivity growth, job creation and skills development, strengthening the rule of law and public finances.
In the tax area, Bogdan Barbu states that the main recommendations aim at reactivating tax support should the economic situation deteriorate as a result of the pandemic, establish a credible medium-term consolidation plan and gradual reduction of the fiscal deficit to maintain the sustainability of public finances or further modernize and computerize the tax administration to improve tax collection, in particular on the basis of voluntary compliance. The organization also recommends removing inequalities (reduced tax rates, exceptions or special tax regimes) and rethinking property taxes while protecting vulnerable taxpayers.
Thus, drawing up a credible medium-term plan to allow for a gradual reduction of the budget deficit or accelerating the modernization of the tax administration are just two of the conditions stemming from the message of opening negotiations, but they will certainly be further elaborated in the roadmap. While there is no deadline for completing the accession process, it is important that Romania keeps up with the other countries included in the current accession wave, namely Bulgaria, Croatia, Brazil, Argentina and Peru.