Romania Budget Gap Lowered By Spending Cuts, Not Tax Increases – Ctrl Bk Chief

Isarescu said increasing taxes would only plunge Romania deeper into recession and the best solution would be for the authorities to fully implement the reforms agreed with the International Monetary Fund.

„In my opinion, such a measure would only make things worse; on the other hand, we can’t continue the current situation, with social and political pressures, with big budgetary expenses,” he said.

Isarescu said the public expenses in Romania amount to around 40% of the gross domestic product, while the budget revenues reach 32% of the GDP at the most.

„So this is the area where we should make an effort and the society has to understand that we can’t ask for more than we collect,” he added.

Finance Minister Sebastian Vladescu said recently that the ministry would analyze the possibility to expand the general taxation pool, after President Traian Basescu warned that the budget deficit could exceed 7% of the gross domestic product in 2010, in light of preliminary data for the first months of the year.

Romania and the IMF set a budget deficit target of 5.9% of GDP in 2010.