An initiative to allow companies to pay their VAT only upon receiving payment from clients was also approved by the international lenders, following persistent support from the business environment. This measure supports SMEs that previously had to pay VAT before cashing in on their invoices, which put pressure on their liquidities. The new system will be implemented for companies with turnovers below 500 thousand euros. Florin Georgescu:

“The system allowing VAT payments after companies have cashed in on their invoices will come into effect on January 1st 2013. A set of measures to stimulate job creation will also become effective this October.”

Liviu Voinea, secretary of state with the Public Finance Ministry, said the measure regarding VAT payments would be supported by a series of safety features, such as compulsory payment via bank transfer or reimbursements only after proof of payment.

The international lenders have also approved the postponement of deadlines for the privatization of state-owned companies. Ten such major enterprises will have private management by the end of the year.

The economic growth forecast for Romania has been lowered to 1.2 percent, from the previously estimated 1.5 percent. The causes include the drought plaguing Romanian agriculture, sub-par economic evolutions in the euro zone, and the low absorption rate of EU funds.

The budget correction expected at the end of August will consider this forecast. Even if there is less money to use now, this correction stipulates that state salaries are to be brought back to the level before the 25-percent cuts in mid 2010. We remind that the cuts were operated as an austerity measure. Other expected measures include returning to pensioners the sums of money that were previously retained unlawfully, as well as paying off the arrears of local authorities.

The international lenders analyzed Romania’s economy together with representatives of the National Bank. Talks were also held on inflation, which reached 3 percent in July and is expected to grow until the end of the year. Inflation has been under pressure from higher food prices, the recent drop of the Romanian leu against foreign currencies and the growth in international oil prices.