Romania’s New Govt To Work With Ctrl Bk, Employers Unions On Action Plan To Counter Fin Crisis

Romania’s new government will work with the central bank, the Romanian association of banks, employers and unions to come up with an action plan to manage the financial crisis and relaunch private lending.

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The creation of a "joint platform of solutions and action plans” at the level of the government, central bank, the association of Romanian banks, employers and unions is the first measure targeting the financial crisis stipulated in the governing program of the democrat liberal and social democrat coalition.

Other measures included in the governing program are increasing the share capital of state-owned CEC Bank to help fund projects of small and medium-sized companies, applying new state aid schemes to stimulate SME activities and ensuring, in the 2009 state budget law, funds for the co-financing of investments eligible for European funds.

The new government also plans to keep the 16% flat tax, but people with low incomes will benefit from fiscal facilities and tax deductions, while the gross minim wage will be increased to RON600 from RON540 as of Jan 1, 2009.

Budget spending will be adjusted to lower the budget deficit to a maximum 2.5% of gross domestic product in 2009, compared to “over 3.5% of GDP in 2008". The new government also plans to lower the number of taxes perceived and lower public spending and redirect extra money toward investments and social security.

The program also entails a minim guaranteed social pension to take all pensions up to RON350 as of Jul 1, 2009, the doubling of state allowances for children and the lowering of household utility bills.

The new government plans to state budget funds going into the insulation and rehabilitation of buildings to save energy and also plans to increase funding for rural infrastructure, county roads and social housing.

Farming subsidies will also be increased, excises for diesel fuel used in agriculture will be lowered to EUR21/ton and loans for production will be 30% subsidized.

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