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IMF prefers to reduce CAS as of 2015 but will not exclude cuts in summer
IMF considers the best moment to curb CAS will be next year as the impact is a significant one. It is also willing to negotiate in summer if the government finds ways to compensate the budget deficit.
It is obviously an important effort and all options and difficult choices should be carefully made. The best moment could be the discussion of 2015 budget and in case a re-evaluation comes up and if a neutral policy can be achieved earlier IMF is open to discussion in summer, said the head of the evaluation Mission, Andrea Schaechter when asked if the CAS reduction target this year was realistic.
The reduction of social contributions is certainly one of the possible directions but that could substantially reduce budget incomes, Schaechter added.
A week ago premier Ponta declared that the budget loss resulting from the CAS drop by 5% - 2.6 billion lei per semester in July cannot be covered only by curbing expenses, increasing taxes and the deficit, but the deficit cannot climb and he would not cut expenses.
The head of the IMF Mission insisted that a reduction of contributions should be taken into account when drawing up the 2015 budget as collected incomes have direct impact on the pension budget and health expenses.
Schaechter added that she agreed with the government target to reduce CAS and the objective behind the measure – the reduction of fiscal burden on labour which is rather high, especially for those with small incomes.