Pension fund deficit for 2007-2008 equals the 22% VAT  

The current pension fund deficit equals the increase in VAT from 19 to 22%. The frequent elections makes Romania’s joining the euro zone uncertain, while in the energy sector, reforms are waiting to be dealt with and strengthened. These are in short the recommendations featured in the analysis report put together by the Romanian Academic Society. Research institute head Sorin Ionita presented the report on Tuesday.

„If the pension’s budget was a company, it would be bankrupt. If we were to fill this whole, we could increase the VAT to 22%. It would not necessarily have to be financed by the budget. But if you don’t have money, you need to get it. The question is when will we address this? The crisis will draw to an end in 2010. We will be left with the chronic issues dating before the crisis. The most serious ones are related to structural deficits. The fever will be gone, but we will be left with rheumatism, ulcers and the rest of the vulnerable spots”, Ionita said.

„It is necessary to adopt a plan for investments and the measures that make each minister comply strictly with their staff budget, goods and services over 2009-2013. We’re not allowed to cut spending according to the mood in 2010, only to find out in the years to come that we cannot run properly. On the other hand, the investment programmes assigned to each ministry need to be presented in public and posted on the web, as target and stage, updated in real time.

The projects selected which have a multiplying effect in creating jobs, production and income because it is impossible to carry on allocating tens of millions of lei for building churches, with zero multiplying effect. Just as we can’t go on financing what local leaders give to ministers, which in their turn decide, in a discretionary manner, to which counties the money go.

Without these reforms, we will face high risks addressing the budget’s implementation: the major risk is that each minister runs its activity with only the following budget rectification in mind, sacrificing necessary institutional reforms; (ii) there is the suspicion that things are far worse than the authorities tell us, which fuels public cynicism and opposition to any reform plan with social costs.”