The 7%-of-GDP public deficit target is "extremely restrictive," but the Finance Ministry will do its best to avoid VAT and income tax hikes this year, the Minister of Finance Tanczos Barna said on December 30, speaking of the 2025 budget planning.

This year's budget could be approved by the end of January if things go according to plan, he added, stressing that the budget planning must be credible as Romania "can no longer afford slippage."

Under the Excessive Deficit Procedure (EDP), the European Commission approved a rather mild seven-year fiscal consolidation plan with a 7%-of-GDP target set for 2025.

"I will do everything possible to build the 2025 budget without an increase in the VAT and income tax rates. We will see the final annual deficit situation in January. We will have all the expenditure forecasts for each main credit authorizing officer, and we will try to stay within this limit of 7% [of GDP deficit limit], although it is extremely restrictive. I do not want to burden the business environment even more; we do not want to burden consumption even more," the minister said on December 30 at the briefing at the end of the government meeting that passed the first fiscal corrective package.

The 2025 budget planning will be realistic, and no expenditures will be approved without firm financing sources, he insisted. 

"We can no longer afford slippage, neither up nor down. If we budget some expenses that fit within the budget envelope, they must be made; if they cannot be made, we must say at the beginning of January that this year, we do not have the possibility of making the respective payments and these things must be assumed", Barna emphasized.

(Photo: George Calin/ Inquam Photos)

iulian@romania-insider.com