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The decrease of CAS reduces the income by 5 billin lei in 2015 and the government did not convince IMF to have other funding sources

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IMF does not believe that the government can cover the income gap resulting in 2015 by the reduction of CAS by 5 percentage points, estimated at approximately 5 billion lei, as the budgetary deficit must get down from 2.2% to 1.4% out of the GDP, governmental sources said.

 

Premier Victor Ponta stated on Thursday that starting October the social insurance contributions will be reduced at the level of the employer by 5 percentage points with a budgetary impact of 850 million lei, without the increase of the budgetary deficit, the head of the executive saying that the measure has not been accepted by the IMF but it is assumed by the government.

 

We consider that the CAS reduction by 5 percentage points must be applied starting this very year and we can do it. We can reasonably and sustainably send to the parliament the draft law regarding the reduction of CAS by 5 percentage points for the last quarter, starting with 1 October, as in this way we don’t have to increase any tax or fee. We have the capacity, as we are good keepers of the budget and with supplementary collections and lower expenditure, for 2014, to cover the negative impact’Ponta said.

 

The government pledged to reduce the budgetary deficit from 2.2% of GDP this year to 1.4% in 2015, the level drafted for 2016 so that in 2017 the indicator lowers to 1.3% of GDP.Governmental sources stated for Mediafax that the IMF opposition regarding the reduction of CAS was fed by higher expenditure for defence included for next year.

 

Premier Victor Ponta stated in May that he assured the vicepresident of the US Joe Biden that the government will commit to all implications of its position in the present regional context, showing that the security cannot be obtained ‘ free of charge’ and there is an agreement that Romania can give 2% of GDP for Defence ‘ by 2016’.

 

At the beginning of April, Ponta stated that Romania must commit to the role of NATO border in a hot region, showing that the budget of the Ministry of Defence must be increased by 0.2% of GDP annually, so that ‘ in 2017’ this should get at 2%.

 

IMF sent on Thursday night that the discussions with the Romanian authorities will continue from the headquarters in Washington, saying that there are some issues unsolved and without mentioning that a mission of the IMF could come back to Bucharest.

 

Teams of IMF and the EC were in Bucharest between 2-12 June for discussions regarding the third evaluation of the stand-by agreement with Romania and for the first evaluation of the programme for payment balacnes with the EU.

 

PM Ponta: We'll no longer need fresh IMF deal

 

Prime Minister Victor Ponta said on Thursday that Romania will no longer need a fresh deal with the International Monetary Fund (IMF), after the 'successful' completion of the current agreement with the international lender.

'When we successfully complete this agreement, we'll no longer need a fresh deal with the IMF, but no less important is that the European Commission by then will have more powers relating the budget control and the tax policies and we'll struggle, in the same way as the other EU members, to attain the targets imposed by the European Commission and the European Council', Ponta said in an interview with Bloomberg.

The prime minister underscored Romania has had a favourable macro-economic development during the time of the three accords struck with the IMF.



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