Romania Cannot Reduce Social Security Contributions In 2011 - President

05.07.2011 ZF English

Romanian President Traian Basescu said Saturday that, in his opinion, it is impossible to reduce social security contribution rates in 2011.

The President said this issue was not discussed with the delegation of International Monetary Fund, European Commission and World Bank officials.

Basescu explained that, while Romania would be able to cope with reduced social security contributions this year, in 2012 the lower collections would pose a problem, because the government is committed to bringing the budget deficit down to around 3% according to ESA, or 2.5% according to the cash model.

IMF mission chief Jeffrey Franks said in February that a mid-year evaluation may reveal budget revenue to have exceeded expectations, thereby allowing the reduction of social security contribution rates.

He pointed out that the Government could also use the extra money on additional investments, for instance matching European funds for projects.

In April, Finance Minister Gheorghe Ialomitianu said the ministry was analyzing this course of action seriously, but a decision would only be made after consultation with the IMF and European Commission, and would take effect only towards the end of the year.