The pension hike, which the previous social-democrat government had set at 40% as of September and which the parliament passed as law, would cost the country’s budget RON9 billion amid declining revenues, a ballooning deficit and ecponomic contraction.
The government has revised its budget deficit target for 2020 to 8.6% of the gross domestic product from a previous projection of 6.7% of GDP and from 3.6% targeted at the beginning of the year.
It also revised its estimates for this year’s economic downturn and now expects a contraction of 3.8% of GDP from a previous estimate of 1.9%. The projection is still more optimistic than the European Commission’s and the IMF’s, which see the Romanian economy contracting by 5% to 6%.