IMF: Romania May Reduce Social Security Taxes If It Guarantees Budget Gap Below 3% In 2012

Romania may reduce the social security taxes paid by employers only if there are guarantees that it can achieve the fiscal targets of 2011 and 2012, when the budget deficit must drop below 3% of the GDP, said people close to the talks between the IMF and Romanian authorities.

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The Government has committed to curbing the budget deficit to 4.4% of the GDP this year, from 6.5% last year.

The draft fiscal-budgetary strategy for 2012-2014 says the Government will reduce social security contributions by two percentage points in the second half of 2011.

In March this year, Romania and its international partners agreed on a EUR5 billion follow-up precautionary deal that will end in 2013. Joint teams from the IMF, the EU and the World Bank will be in Bucharest until May 9 for the first review of the follow-up agreement.

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