“A reduction by five percentage points of the social security tax would have a very important impact for the budget deficit and the pension system, so the 2015 budget discussions are probably the most appropriate timing for that,” said Andrea Schaechter, IMF mission chief for Romania.
Romania is considering cutting social security contributions by up to five percentage points in a move to decrease the burden on labor.
While the IMF supports the initiative, the government should start by identifying new sources to improve revenue collection before implementing the measure, Schaechter said.
“We don’t want to endanger future pensions and healthcare system,” the IMF official said.