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IMF mission head Jeffrey Franks on possible cut in Romania social contributions: There will be very limited room in the 2012 budget for new initiatives

de Cristian Pantazi     HotNews.ro
Vineri, 21 octombrie 2011, 11:02 English | Top News

Jeffrey Franks
Foto: Agerpres
IMF mission head Jeffrey Franks has told HotNews.ro that Romanian "growth in 2012 will be lower than we had previously expected due to the effects of problems in the rest of the European Union." On a possible cut in social contributions, a measure that the Romanian business environment has been pressing for, Franks said "there will be very limited room in the 2012 budget for new initiatives". He also sanctioned the Romanian government progress when it comes to arrears and the reform of state companies.

  • An IMF delegation will come to Romania next week to discuss with Romanian authorities the 2012 draft budget and the fulfillment of measures to which Romania has committed in a precautionary deal. Also next week an official European Commission forecast for 2012 growth is expected and it will be used by the Romanian authorities to set its budget.

Rep.:  Would you approve a request from the Romanian Govt. to renegotiate the deficit target for 2012, as the IMF is likely to revise down its growth forecast to around 2% in 2012, from 3.5% presently?
Jeffrey Franks: The authorities remain firmly committed to achieving the agreed deficit target in 2012.  Any deviation from this target would require ministerial level approval from EU, since it is part of Romania's commitment under the Excessive Deficit Procedure. We are in the process of revising our economic growth forecast and will announce the results at the end of our upcoming mission.  Growth in 2012 will be lower than we had previously expected due to the effects of problems in the rest of the European Union.

Rep.: Would you consider a proposal from the Government to lower the social contributions (CAS)?
Jeffrey Franks: There will be very limited room in the 2012 budget for new initiatives. The government will have to decide which measures it wished to implement with that limited space, whether it be changes in social contributions, wages, investment spending, etc.

Rep.: How would you assess the efforts made by the Romanian authorities in these last months regarding the reforms and the arrears?
Jeffrey Franks: Progress has been mixed.  In some cases, there are substantial achievements, while in others much remains to be done. There is a definite need to step up actions both to clear arrears and to reform state-owned enterprises.

Note: Jeffrey Franks has answered the HotNews.ro questions by e-mail.






















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