Negotiations on the revision of the PNRR have ended, and in the revised plan, the percentage of 9.4% of GDP on pension costs has been abolished, a new mechanism for limiting pension costs is provided for in the new pension law discussed by the EU executive committee, Minister of Investments and European Projects Adrian Cachiu said on Thursday .

According to him, the new recovery and stability plan for Romania is currently being analyzed by the services of the European Commission, and it is estimated that it will be adopted at the beginning of December in ECOFIN.

• “This revised plan includes additional refinancing of €1.4 billion under RepowerEu, which will become an integral part of Romania’s PNRR.
• According to our estimates, these interdepartmental debates in the EC will end somewhere on November 21-22, and the approval in ECOFIN, since the recovery and stability plans are approved by the EU Financial Council, will be approved in early December, if I am not mistaken, this Council will be on December 8-9.
• What I can say very clearly is that in the new recovery plan, this percentage of 9.4% of GDP for the public pension system will no longer be there,” Cachiu said on Thursday.

When asked if there will be a new mechanism in the PNRR instead of canceling 9.4% of GDP, the minister said that this mechanism will be in the new pension law.

• “It has been removed from the PNRR, and the new mechanism is provided for by the pension law. Pension legislation provides for a number of mechanisms for indexation or correlation with the increase in income from contributions. If I’m not mistaken, there is this article.
• Therefore, the braking mechanism required by the European Commission and the original PNRR is provided for in the pension law and was analyzed by the European Commission when the draft of the new pension law was under consideration,” Cachiu said.

Regarding the European Commission’s country forecast, which significantly revised the forecast for Romania with a budget deficit much larger than the one estimated a few months ago, Caciu said the forecast did not take into account the new pension law.

• “We had an agreement with the EC that the pension law would be passed by Parliament before payment request No. 3 was submitted, to see the total package of the seniority law and the pension law so that a positive assessment could be made. Commission on fiscal and budget consolidation.
• On the other hand, the form of the pension law approved by the parliament is the form that was discussed with the European Commission and the World Bank was also at the negotiating table.
• Why is this not provided for in the forecast of the European Commission? Because the European Commission takes into account current regulations that have an effect. The pension law will create income for the state budget at the expense of consumption, that is, it is necessary to look not only at the gross envelope, but at the net effect.” said Adrian Cachiu.

Is it possible to revise next year’s deficit target?

To this question, Minister Caciu said that Europe is in recession and this is also affecting Romania’s economy.

“All negotiations and arguments presented by the Government were taken into account by the EC. A new way of adjusting Romania’s budget deficit will probably be discussed next year, when the ESA deficit for 2023 will be taken into account, sometime after April 2024,” Caciu also clarified.