Labor tax cut will cost the Government RON 5 billion next year

Newsroom 13/06/2014 | 16:33

The Romanian government failed to convince IMF it can fill the void that will be generated next year through the social contributions cuts bill it is trying to pass, writes Mediafax. The measure will generate a loss of RON 5 billion in revenue in a year when the state is expected to reduce the deficit to 1.4 percent of GDP from 2.2 percent.

The government plans to cut social contributions paid by employers by 5 percentage points from Oct. 1, even if the IMF doesn’t agree, Ponta told reporters in Bucharest on Thursday.

The IMF estimates Romania’s economy will grow 2.8 percent this year. While the current account deficit has “remained low” and fiscal imbalances have improved, there is still work to be done, the IMF said in an e-mailed statement on Friday.

“Teams have had constructive discussions with the Romanian authorities on how to ensure further progress and have reached agreement on important policies,” the IMF said in an e-mailed statement.

“Some issues remain outstanding,” and talks with the government will continue, the IMF said.