Romanian government plans to introduce Treasury blocked accounts for kids, where parents can put money for their children but they don’t have the right to withdraw money until their offspring has reached the age of 18, according to an emergency ordinance project released in a moment when the government desperately needs money to cover soaring expenses.
The “Junior individual savings accounts” could be opened at the State Treasury without the consent of a parent but parents are nevertheless asked to put money for the education of their children.
“The amounts in the Junior individual savings account cannot be withdrawn until the person has reached the age of 18, except for the following: health expenses for treating the child in the case of his / her risk of death; in case of death,” the project says.
The government promises to pay a 3 percent interest rate for the savings in these accounts and to subsidize the accounts by paying RON 600 if the parents put at least RON 1,200 into the account during one year.
But according to the project, the government will pay the entire amount when the account-owner has reached the age of 18 – meaning that there are no expenses for the government for years, and the money from the Treasury accounts can be used to cover other expenses of the government.
The project comes in a moment when the Romanian government desperately needs money to cover soaring expenses.
Official data show that Romania’s general consolidated budget, which includes fiscal and social budgets of the government, registered after the first eight months of this year a deficit of RON 14.6 billion (EUR 3.1 billion), or 1.54 percent of GDP, 2.2 times bigger compared with the same period of 2017 as soaring expenses overshadows revenue increase.
But experts are particularly concerned about the rapid increase of government’s interest expenses. Official data show that interest expense rose by 21.3 percent during the first eight months of this year, to RON 9.03 billion, from RON 7.4 billion in January-August 2017.
Higher deficits can make it more difficult for the Romanian government to raise funds in order to finance the public debt.