Romania’s finance minister says reduction of social insurance contributions from July is paramount

Ioana Petrescu, the minister of finance, said on Thursday that her main priority is the reduction of social insurance contributions (CAS) paid by employers by 5 percentage points starting July.

This measure would have a net impact of RON 1.5 billion to the state budget, according to the minister.

However, the reduction will have to be approved by the International Monetary Fund, which will start a new review mission in Bucharest on June 2. Romania has an ongoing EUR 4 billion stand-by agreement with the IMF and the European Commission. Under this loan deal, the government pledged to reform key sectors such as healthcare and transport, while maintaining public expenditure in place.

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Guillermo Tolosa, resident representative in Romania and Bulgaria of the IMF, told BR in an interview in late April that reduction of CAS should be included in next year’s budget talks. He suggested that the government should first make more Romanians pay the CAS and look whether high-income individuals pay enough.

Tax experts said the decrease in CAS should ease the pressure on companies and in the same time help shrink the informal labor market.

Ovidiu Posirca