Romanian flat tax, VAT to stay the same after accord with the IMF and EC, premier says

Romania could take 13 billion euros, of the 18 billion euro possible loan, from the IMF while the rest of the money will be borrowed from the EC, the World Bank or other financial institutions, people close to the negotiations told NewsIn yesterday.

Romania could ink a two-year accord with the IMF and receive an 18 billion euro loan to cope with the economic crisis which generated dwindling incomes to the state budget. Two thirds will go to the central lender BNR and the rest to the Finance Ministry which is to give some to banks.

“We are to ink this accord to prevent the negative consequences of the crisis on Romania’s economy,” Boc said. 

Raising the VAT would affect the low-income population while hiking the flat tax will have a negative impact on the business environment, he added.

The idea of borrowing money from the IMF stirred controversies inside the ruling coalition, but also among lawmakers, some claiming such a move would have disastrous social effects.

“I am optimistic,” president Traian Basescu said on March 12. A loan from the IMF would not result into a social disaster, as some put it, but on the contrary, will help spare the people from a difficult situation and also contribute to the country’s modernization, he added.