VAT hike: Between saving the budget and disappointment of prolonged recession
The slowing growth pace of VAT revenues towards yearend is
casting a shadow of doubt on the way the 24% hiked VAT, which saved
the budgetary gap last year, will help the budget in 2011 as well,
considering the ambitious target of narrowing the deficit to 4.4%
of GDP.
The Finance Ministry for this year projects VAT revenues worth
43.1%, 10% above the sums collected last year.
In December, the growth pace of sums collected from VAT almost
halved against November, being the most sluggish advance registered
after the decision to lift the rate by 5%.
Finance Minister Gheorghe IalomiĊ£ianu yesterday started VAT
revenues covered the payment of arrears and made it possible for
the budgetary gap target to be hit at the end of 2010, maintaining
the IMF and the European Commission welcomed the "very good"
results Romania obtained as part of the standby agreement.
However, the IMF has one big disappointment after two years, namely
that the economy has not returned to growth, yet.
Some analysts stated that had the VAT not been hiked, there would
have been chances for the economy to resume growth.