Another decision of the Ponta cabinet is a decentralization of fiscal responsibility, which means that starting 2013 local authorities will decide whether taxes are to be adjusted for inflation. Romania’s draft budget for 2013 is another hot topic on the agenda. Here is what Prime Minister Ponta told the members of his cabinet:

Victor Ponta: “In January people must already know what to expect in terms of pensions and salaries, taxes and administration. What’s important is that between January 7 and 10 all Ministers have their budget for 2013 in the final draft. We have to prepare for the talks with our international partners and for the debates in Parliament”.

Irrespective of what the budget for next year will look like, the only certain thing right now is that the International Monetary Fund will definitely have a bearing on its final form, given that over the last few years the Fund has had a great say in most economic decision-making processes. Moreover, in its last assessment of Romania’s economic performance, the IMF praised the austerity measures taken by the authorities.

As a consequence, the IMF expects the budget deficit to go down by a half, namely to 2.2% of the country’s GDP. IMF officials have warned, however, that Romania’s strong commitment to achieving fiscal sustainability and considerately implementing structural reforms remains key to boosting economic growth. As regards the budget, we may be sure of one thing: the budget bill will be quickly adopted, given that the Government can rely on a 70% majority in Parliament. Over the last years budget bills have been subject to a lot of criticism, mostly for the insufficient resources earmarked to key fields such as education and health care.