IMF mission head for Romania: We are considering several variants

Head of the International Monetary Fund (IMF) mission for Romania Jeffrey Franks said on Wednesday that he can neither confirm nor deny that a prospective VAT and flat-tax hike is being discussed.

Asked if rising taxes would be reasonable in a country with such high tax evasion as Romania, Jeffrey Franks said that „we are currently considering several possibilities and I cannot comment on any of them, nor say if the tax increase will be beneficial under the given tax evasion conditions.’ According to leader of ‘ Alfa Cartel’ National Trade Union Confederation Bogdan Hossu, in Romania, tax evasion stands at 28 percent. During Tuesday’s talks with the IMF mission in Romania, the union leaders asked for a 4 pct cut in tax evasion, including on the labor market.

The IMF mission is these days in Bucharest to assess the way Romania fulfilled the conditionalities of the Stand-by Agreement. The mission will then prepare the fourth report on Romania’s economic program, a document that will be discussed by the Fund Board in the second half of June. If the report is approved, Romania will receive the fifth tranche worth SDR 768 million (0.85 billion euros) of the IMF loan.

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