Romania’s Liberal Government considers postponing, or downsizing, the 40% pension hike that was programmed to take place this September in line with a law passed last year by the majority formed by the Social Democrats and Liberal Democrat Alliance, G4media reported quoting sources familiar with the topic.

The cost of the hike is estimated at RON 8 billion (EUR 1.66 billion, 0.7% of GDP) this year alone with a proportionally bigger impact in 2021.

Notably, the Government is expected to come up with the first budget revision this week and president Klaus Iohannis has urged the executive to provide a comprehensive analysis including the whole year.

It is thus reasonable to expect a fair answer from the Government about this rather critical detail.

Neither prime minister Ludovic Orban nor finance minister Florin Citu have so far confirmed or infirmed whether the 40% pension hike would be actually operated. Both of them have been claiming that “the money is included in the budget”, and “all the laws will be observed”.

However, this was before the COVID-19 crisis, and even then the consensus expectations were for a budget deficit significantly above the 3.6% of GDP official target (irrelevant at this moment) even without the 40% pension hike.

(Photo: George Oprea/ Dreamstime)

editor@romania-insider.com