"We don't expect any economic crisis, we don't expect outstanding tax rate hikes," president Klaus Iohannis said at a press conference on July 10. 

At the same time, finance minister Marcel Bolos, speaking for Ziarul Financiar, confirmed that no VAT hike is envisaged and "progressive taxation is out of the question."

President Iohannis, in an unusual comment on the fiscal policy, defended the Government's lack of budgetary corrective measures this year and rejected the pessimistic scenarios drafted by "a certain political party [opposition USR most likely] and some representatives of the European Commission." 

"We can not expect [budgetary] austerity in an election year," president Iohannis said.

He admitted that the deficit "will be considerably higher than 3%, which is considered optimal" but he stressed that he doesn't expect "an extraordinary situation to arise," such as a [debt] crisis, higher taxes or other radical steps.

Minister Bolos admitted that the European Commission sent Romania a trajectory for rectifying the budget deficit over a period of four or seven years (two different scenarios), which starts from a budget deficit of 6.9% of GDP in 2024. 

However, Bolos said that there has yet to be an officially agreed decision with the European Commission. He spoke of "a new excessive deficit procedure."

Romania was placed under an excessive deficit procedure in 2021, but the process was suspended after the Covid-19 crisis emerged

(Photo: Juan Moyano/ Dreamstime)

iulian@romania-insider.com