Romania needs viable spending programme

Romania must devise a viable medium-term budgetary spending and public investment programme, says Graeme Justice, the International Monetary Fund (IMF) resident representative in Bucharest. Over the last few years, the IMF has been constantly criticising the incapability of the Finance Ministry to set a multiannual strategy for spending public funds, to reach beyond electoral cycles. Justice says that, under the circumstances, the Finance Ministry needs to consider the effects of the pension system reform on the budget deficit. These effects could add at least one percent to the deficit, given that collection of social security contributions is getting weaker by the day. The IMF will continue to work with the Finance Ministry this spring in order to find ways to strengthen the Romanian fiscal administration. The strategy to reduce the fiscal pressure in 2005 and in the next years will also be completed. The Fund has acknowledged the excessively heavy taxation on the work force in Romania, and this is the only tax category for which it agreed to reductions, given the weak collection capability of the fiscal administration. ZF