Business report: 40% increase in pensions, fined by all the press: It is not a problem that pensions increase, the problem is who gives the money / Politics and the pandemic shake the markets / 2,000 million euros of a single time – Finance & Banking

“It is not a problem that pensions are increasing, the problem is who gives the money. Because the budget is empty, 30% of state spending is financed today with loans. The budget deficit will reach 12-15% of GDP, a percentage that nobody finances. Ionut Dumitru, chief economist at Raiffeisen Bank, believes that the solution to the huge deficit would be new debt to the IMF, along with the harsh conditions imposed by such an arrangement. Adrian Vasilescu, NBR, says, on the contrary: The IMF does not finance the budget deficit, in our case, but the current account deficit (inflows / outflows of foreign exchange). So there is no emergency solution from the IMF. Finance Minister Florin Cîţu says that the decision of the Parliament, controlled by the PSD, is “an act of aggression against the stability of the Romanian economy”: “Everyone sees how a group wants to blow up the country”, ZF also writes.

Pension increase by 40%: how to put the gun to Romania’s temple and shoot. PSD, PRO Romania, UDMR and ALDE have just joined forces and voted for the most aberrant economic measure in the last 30 years: increasing pensions by 40%. Let’s understand, not small and very small pensions that needed such a thing, but all pensions. More precisely, the pension point. The budgetary effects are huge: about 6.5 percentage points added to the budget deficit, since it would have reached almost 9% anyway and without this pump. The reason is simple: this money simply does not exist. They cannot be taken out of the economy with taxes or investment cuts, because it would mean that the entire country’s budget would be included in salaries and pensions, writes Pressone.ro.

Politics and the pandemic are shaking the markets. The national currency reacted differently to the main currencies, during the pandemic, the euro / leu exchange rate had an upward trend, while the dollar / leu price had a downward trend. This trend was marked by the weakening of the US currency compared to the European one in the context of the crisis caused by Covid-19, but also as a consequence of the events taking place on the political scene, both nationally and globally. The latest event in our Parliament, namely, yesterday’s vote on the 40% increase in pensions, accentuated the depreciation trends of the leu against the euro and increased, in less than half an hour, long-term financing costs term of the State. The euro / leu exchange rate had started to rise a few seconds after the vote, rising to 4,862 on the interbank market. One hour before the vote, the exchange rate reached, for a short time, even 4,864 lei / euro. The maximum level of the official exchange rate, announced by the NBR, was set last week at 4.8595 lei / euro. Yesterday, one euro was quoted at 4.8590 lei, the value announced by the NBR. The rise in the euro means price increases for imported products, but also for other services taxed in euros, such as telecommunications. Recall that in March (March 16, for example), the euro / leu exchange rate was 4.8242, writes Bursa.

The decision to increase pensions by 40% will bring the state budget to its knees. The negative effects on the Romanian economy will not be long in coming. In 2019, the value of pensions paid was 69.9 billion lei. We are witnessing an increase of over 39 billion lei. This increase would increase the budget deficit to more than 11% of GDP. First of all, it should be noted that the current pension fund is not a fund in the true sense of the word, but only a system of redistribution of money transferred by current employees to retirees. It is not the government that pays the pensions, but the employees who are currently employed. The government only redistributes this money from employees to retirees. The source of financing for the pension increase has not been specified, but if this law is approved in its current form, those who will pay this increase will be private sector employees, who will be taxed. writes Claudiu Vuță in project-e.ro

€ 2 billion in one go: How all two-year deficit calculations were turned upside down in one day. The law passed in Parliament represents an increase of at least 2 billion euros in 2020. The budget deficit could increase by 11% of GDP in 2021. An increase in the pension point by 40% as of September 1, 2020 would lead to an increase in the GDP share of social assistance expenditures by more than 2 percentage points in 2021, according to the latest estimates from the Fiscal Council. The government decided on the occasion of the second budget rectification a 14% increase in the pension point that would represent a significant budgetary effort, of 3.6 billion lei in 2020 and 10.92 billion lei in 2021, respectively. On the other hand, the increase of only 14% of the pension point would have kept the share of these expenses, in relation to GDP, at the current level, admitting that the CNSP’s forecasts on the evolution of the economy will be correct, he stressed. the institution. write cursdeguvernare.ro

What does it mean to increase pensions by 40% instead of 14%? 41 billion lei of additional spending in two years. “Things are very dangerous. We live on duty.” An increase in pensions by 40% instead of 14%, as currently forecast, means an additional hole in the 2020 and 2021 budgets, economists say. They warn that the leu could depreciate and the state of the economy could deteriorate rapidly, even by making comparisons with the situation in Greece a few years ago. Ionuț Dumitru, chief economist at Raiffeisen Bank and former chairman of the Fiscal Council, told Digi 24 that the impact will be 11 billion lei this year and 30 billion lei next. According to Ionuț Dumitru, only from the increase in pensions there will be an impact of 2.8% of the Gross Domestic Product (GDP) next year. This would lead to a budget deficit of 10-11% of GDP, which would send Romania on a loan from the International Monetary Fund (IMF), Dumitru added. Romania already has an estimated deficit of 8.6% this year, and our country must return in the coming years below the level of 3% foreseen in the European treaties. Tax advisor Emilian Duca says that “no one will borrow from Romania to pay pensions and salaries. Things are very dangerous. We live in debt, ”says Emilian Duca. “After pensions, there will be a doubling of allowances, an increase in the minimum income and social benefits. We are attending a fight of the deaf, which will last until December 6, at 10 pm. From an economic point of view, it is catastrophic, ”Duca said. cited by Libertatea.