Economy

PM Orban plans 15% pension rise in September – press reports

Romanian Prime Minister Ludovic Orban plans to increase pensions in September by 15% instead of the 40% prescribed by the current Pension Bill, financial news portal Economica reports.

Last month, Finance Minister Florin Cîțu said his ministry will propose a pension rise of 10 percent as the budget of the country “ravaged by the coronavirus pandemic” cannot sustain a 40 percent pension hike. A three-step pension increase was included in the Pension Bill last year by the previous, Social-Democrat government in order to bolster the party’s popular support. According to that, one 40 percent pension increase must be done this September and another 10% increase next September.

Orban recently said that it was too early to decide on the actual measure of the pension hike and that this can only be decided once economic data for the first half of the year are available. Previously Adrian Codirlasu, President of CFA Romania, an association of Romanian banks and investment firms, said that the 40 percent pension hike in September would increase the country’s budget deficit by 1 percent of GDP this year alone and about 3 percent next year, due to its cumulative effect.

In its quarterly recommendations for Romania, the European Commission warned in May that should the government go ahead with the 40 percent increase, it would bring this year’s budget deficit to 9.2 percent of GDP and next year’s to 11.4 percent. The government’s May projections predicted a 6.7 percent budget deficit compared with 4.3 percent in 2019 and an increase of Romania’s public debt by the end of the year to 40.9 percent of GDP from 35.2 percent in 2019.

The opposition Social-Democrats, the authors of the pension increase, warned that should the government attempt to change “a single comma” in the pension bill, they will submit a motion of no confidence against the Orban cabinet.

Title image: Romanian Prime Minister Ludovic Orban. (source: Facebook)

Author: Dénes Albert