According to the latest report, the International Monetary Fund (IMF) estimates Romania’s economic growth at 2.2% in 2023, a downward revision from the 2.4% previously forecast.

As for next year (2024), it projects 3.8%, up from 3.7%.

Average annual inflation expected by the IMF for Romania is 10.7% in 2023 and 5.8% in 2024.

The Fund’s mission in the country recently ended, and its representatives clarified that the deficit will be 6% in 2023, and 5% in 2024.

The head of the IMF’s mission in Romania, Ian Kees Martijn, says the government’s package of fiscal measures is aimed at reducing the budget deficit, but many other programs are still needed to improve efficiency and revenues in general.

Sales taxes applied to banks and big business unfairly burden low-profit companies and could reduce financial intermediation, he said.

What else did the head of the IMF mission say?

• “The package of fiscal measures is good, but it needs to be improved. The new fiscal package will improve the situation by 2024 in terms of controlling the budget deficit at the level of 3% of GDP. The goal will not be achieved in 2024. Sales taxes will be a burden for some companies”

• “It is necessary to work more on the elimination of tax benefits and the law on property taxation and the transition to a green economy. Otherwise, the results cannot be predicted.”

• “It is important for Romania to put public finances on a healthy path. The fiscal package will be an important first step in this direction.”

• “Each member country has the right to ask for help from the IMF. At this stage, we do not see the need for Romania to do this.”

• “Our advice is to continue cleaning the system by removing exceptions. This will be the direction of our advice.”

• “The tax on micro-enterprises is an area that worries us and should be improved. Nothing in fact, except for a legislative gap and the possibility of such entrepreneurs to evade and not pay tax. The threshold of 250,000 euros is not enough for them to avoid paying tax. We believe that €250,000 is too much. I don’t know the exact number.”

• “We are for a single VAT. Whether an idea that does not exclude these households should continue should be explored. We need to simplify the system and introduce a single tax to simplify the system.”

• “In the next two years, an increase in revenues of more than 2% of GDP will be required, in addition to the revenues from the latest tax package. To this end, the key measures to be considered are: 1. Abolition of remaining exemptions, privileges 2. Further simplification of VAT 3. Implementation of a reformed property tax 4. Use of fiscal policy to promote energy efficiency and promote the transition to a carbon-neutral economy Permanent improved revenue management, while necessary, does not provide quick or predictable results and cannot be relied upon to achieve the necessary fiscal adjustment in the short term.”