The Government wants to build next year’s budget so that it meets the assumed deficit target of 1.2% plus the temporary deviation of 0.5 percentage points (pp).

However, it needs to identify compensatory measures to counterbalance the impact of the new Tax Code, which cuts the VAT rate from 24% to 19%, said Finance Minister Eugen Teodorovici, cited by local Mediafax.

He added that the agreement with the International Monetary Fund is still ongoing, and that the Government will keep the commitments made to its international partners.

“There are already several compensatory measures which reduce the deficit. We said that it will be below 3%, but it will be much lower,” he said.

The VAT cut on food from 24% to 9% led to an increase in sales of at least 17%, which “says a lot”, Teodorovici added.

editor@romania-insider.com