Nastase lobbies for quicker CAS cut

Prime Minister Adrian Nastase has said that he is in favour of a faster reduction in the social security contributions (CAS), which should go down to approximately 40-42% of the gross salary in the next few years.

“Mihai Tanasescu was talking about a 44% quota by 2007. The lower we manage to push them, the more of the black market employment will be eliminated. I for one am in favour of a faster social security contribution decline, but surely, when I get arguments against it from the Finance Ministry about collection of funds for necessary spending, I must be careful to what I’m saying,” Nastase stated.

The Premier added that, in principle, he thought it was essential for the Cabinet to consider a CAS reduction.

At present, the social security contributions account for 49% of the gross salary.

Also, the Prime Minister said in reply to a question about the Government’s plans to attract more investments for infrastructure, that the IMF should bear in mind the economic situation and the current possibilities of the country when discussing the budgetary deficit.

“The IMF is, in a way, similar to someone who holds the key to the supply room and wants to keep the strategic reserves there for as long as possible. We have to bear in mind that sometimes products exceed their shelf life if kept on the shelves for too long. It is very important to understand we are moving to a new economic phase, that we are out of convalescence and we have done our homework in terms of macroeconomic stability. We cannot live on $100 wages indefinitely,” Nastase said. Finance minister Mihai Tanasescu had stated last Monday that the memorandum of understanding for the new agreement had been completed, with talks yet to be concluded on this year’s budget deficit.

The IMF representatives want the budget to include the expenses on infrastructure projects run by public-private partnership, while the Romanian authorities want the expenses recorded as beyond the scope of the budget, like the European Union does.

Nastase added that he was convinced the Romanian authorities would eventually reach “a good compromise” with the IMF. The difficulty level of the final negotiations for a new agreement with the IMF will show in the conclusions drawn when the assessment of the effectiveness of the previous agreements, scheduled for March 29, is over.

The Premier cared to specify that the Government would grant all the investors, the Americans included, only those incentives agreed upon during negotiations with the EU, this way ensuring a non-discriminatory treatment for business people.