The social security tax (CAS) will be cut by 5 percentage points from October 1, impacting the budget by RON 850 million (some EUR 190 million), without increasing the budget deficit, according to the Romanian Prime Minister Victor Ponta, who held a press conference on Thursday evening, June 12.

This measure doesn’t have the approval of the International Monetary Fund IMF, but it is taken on by the Government.

The measure will be introduced through a bill that the Government will send to the Parliament next week. It s a “reasonable and sustainable” measure that the Government has taken on itself, the PM has said.

“The agreement with the IMF, the European Commission and the World Bank remains functional, is not interrupted or terminated,” said the Prime Minister.

"The international institutions said one thing: firstly, we stay within the deficit targets, and the institutions' agreement for the coming years will be given based on the discussions we will have in late-November for the 2015 and 2016 budget. No, there is no agreement or disagreement. When the salaries and pensions were cut, it wasn't the IMF that cut them, but the Romanian Government. We restored the cut. When we cut the CAS, we will cut it. They ask one thing, to keep our obligations on macroeconomic targets, to continue structural reforms and to improve management of state-owned companies," Ponta said during a press conference. 

He also said that the measure's impact will be covered through budget revenues.

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Irina Popescu, irina.popescu@romania-insider.com

(photo source: gov.ro)