IMF Says Tax Cuts In Romania Not Possible On Short-Term

Romania can’t afford to reduce its main taxes in the coming years, because the measure would entail substantial spending cuts in the public system, an official of the International Monetary Fund said Monday.

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"I don't see enough room for substantial tax reductions in 2012, as the budget deficit must drop below 3% of the gross domestic product and this would imply severe measures in the expenditure sector, measures that are highly improbable. We have to be realistic," IMF mission head Jeffrey Franks said.

Speaking at a news conference in Bucharest, Franks said the government agreed to maintain fiscal stability throughout 2011 and 2012.

"In time, over the next 5 to 10 years, I hope that Romania will improve its tax collection system to make cuts possible for the value added tax rate, the social security contributions and other taxes," he added.

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