Romania: fill the budget gap - but how?
Romanian Finance Minister Adrian Câciu has announced that the government needs to cut budget spending by at least 20 billion lei (about four billion euros) due to lower tax revenues. The government has said that there won’t be layoffs or salary cuts in the public sector, but cutbacks in "non-substantial expenditures". The Romanian press puzzles over precisely what measures will be taken.
The usual cutback tactics leave country lagging behind
Mathematics professor Ștefan Vlaston says in Adevărul that there will be cutbacks on investments again:
“Do they think we’ll be able to plug the hole of 20 billion lei by giving up coffee, cigarettes and pens? More than 80 percent of the budget is spent on pensions and salaries, as well as interest payments and repayments of government loans. What are the non-essential expenditures? We’ll see what ideas the ministers come to the government meeting with and what they bring in terms of proposed cuts. In recent years investments were always the first thing to be sacrificed. That’s why we are weak in terms of infrastructure and last in Europe in terms of digitalisation.”
Combat undeclared work and tax evasion
Business paper Ziarul Financiar recalls a similar situation in 2010, when the government’s countermeasures plunged the country into a crisis:
“The economy, and above all the private sector, was hit hard back then, and hundreds of thousands of Romanians went to work abroad. ... Now the political leaders say they will neither cut public sector salaries nor raise taxes, but other ways must be found to cover the shortfall. Unfortunately, no one believes that state revenues can be increased by expanding the tax base or collecting taxes from those who evade them.”