Unless an administrative reform is carried out immediately, doubled by reform to reduce some fiscal exceptions, Romania heads towards a public deficit greater than 6.2% of GDP, putting on ice by default the disbursement of European funds and triggering political instability, Romanian prime minister Marcel Ciolacu told Aleph News.

The reforms in the budgetary sector and the fiscal corrective measures will be enacted simultaneously and enforced part of them immediately, part in 2024, he said.

PM Ciolacu confirmed an overall increase in effective taxation in order to finance social policies, but he stressed that this would be achieved through eliminating special taxation regimes ("exceptions").

"The biggest challenge is to make the corrections without increasing the VAT," the prime minister added.

The PM mentioned the IT industry as a place where exceptions would be eliminated and added that "an increase in excise duties and royalties on cigarettes" is possible.

"Romania cannot be an offshore country [in terms of tax rates]. In Romania, you cannot have offshore taxation and European social measures. At this moment, Romania can no longer afford this," PM Ciolacu said.

(Photo: Octav Ganea/ Inquam Photos)

iulian@romania-insider.com