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Coalition for Romania's Development: Economy cannot support 40% increase in pensions
The Romanian economy cannot support the 40% increase in pension expenditures, given the negative evolution of the global economy and, implicitly, nationally, caused by the Covid-19 pandemic, show the representatives of the Coalition for Romania's Development (CDR).
"The Coalition for Romania's Development reports the populism manifested yesterday in Parliament by the decision to increase pensions a few days before the elections. CDR emphasizes that the country's economy cannot support the 40% increase in pension expenditures given the negative evolution of the global economy and, implicitly, nationally, caused by the Covid-19 pandemic. The business milieu is deeply concerned about the structural changes that the measures adopted by Parliament will generate in the state budget, which will no longer have resources for investment, although they should be the engine economic recovery," reads a CDR release sent on Wednesday.
On the other hand, according to the businesspeople, Romania will have to face an additional cost when it borrows from the international market to finance the increase in pensions, a cost that will deepen the budget deficit and, thus, the spiral towards an economic crisis.
"CDR calls on the responsible decision-makers to act in order to avoid Romania's entry into a financial crisis, which is imminent, as long as the measure adopted yesterday [Tuesday] by Parliament remains in force", the quoted document underlines.
The plenary session of Parliament passed, on Tuesday, the budget revision for 2020, with the Social Democratic Party (PSD) amendment regarding the 40% increase of the pension point.
There were 242 votes in favor, 147 against and 11 abstentions.
The parliamentarians decided, at the proposal of PSD, to repeal the article according to which the pension point is increased by 14%, thus remaining in force the law of the public pension system which provides for its increase by 40%.
CDR is a private initiative built as a collaboration agreement through the collective participation of its members and brings together organizations such as the American Chamber of Commerce in Romania (AmCham), the French Chamber of Commerce in Romania (CCIFER), the Romanian Businesspeople's Association (AOAR), the Romanian-German Chamber of Commerce and Industry (AHK), Romanian Business Leaders (RBL), the Foreign Investors Council (FIC), the Concordia Employers' Confederation (CPC) and the National Council of Private Small and Medium Enterprises in Romania (CNIPMMR).
The companies represented by the 25 CDR member business organizations employ over one million people and generate approximately 50% of GDP.