Gratiela Iordache, FinMin: Taxes Must Not Be Raised

• Cutting public spending and absorbing more European funds, top priorities for the Ministry of Finance

Although maintaining the flat tax and the value-added tax unchanged required a huge effort for Romania in 2009, these taxes must continue to remain the same in 2010, too, according to Ministry of Finance Secretary of State Gratiela Iordache, who attended a conference organised yesterday by the European Commission and the European Institute in Romania.

"Raising taxes would be a great mistake. It would give the example of a procyclic policy to which Romania does not want to return," Iordache explained for BURSA. She stressed that procyclic policies had caused severe imbalances in 2007 and 2008, which had in turn aggravated Romania"s exposure to the crisis. She further emphasized that the country needed to cut public spending in 2010.

"Cutting public spending and absorbing European funds will be key in 2010. Only by so doing will we be able to secure the space necessary for future investment," Gratiela Iordache said. According to her, Romania currently has numerous opportunities and the potential for stability, despite economic turbulence.

Lucian Croitoru, Advisor to the Governor of the National Bank of Romania (BNR) also believes that adjusting the public sector is key to delivering the country past the crisis because otherwise "we may not be able to avoid raising taxes, and that would prevent economic recovery."

Lucian Croitoru further stressed that he was not favouring a tax raise, which would be as big a mistake as a tax decrease.