The Governor of the National Bank of Romania (BNR), Mugur Isarescu, claims that politicians must be very careful with increasing the pension point by 40 pct from September 1, given the economic increase is only 4 pct, if "we don't want to wander 40 years through a financial desert."
"We mustn't obsess on biblical figures and we must be very careful if we don't want to wander like this some 40 years through a financial desert. I see the only discussion is 40 pct. Well, the law is broad and wide, has so many provisions. Let's be serious with the figures. I can't give you an answer now because I don't have an answer. This is only a political solution. So we don't have a financial and economic solution. When the economy grows by 4 pct something can't grow by 40 pct, because it's not something marginal, it's half of the active population of the country. How much philosophy needs to be made here? True, the solution is difficult, but it's political and social," said Mugur Isarescu.
Furthermore, in what regards if there is money or not for increasing pensions, the BNR Governor said "there's no money, given that Romania has a budget deficit, not a surplus".
On November 27, the head economist of the National Bank of Romania, Valentin Lazea, claimed that delaying the increase of the pension point to 1,775 RON from September 1, 2020 is the only measure capable to bring the deficit close, but marginally over the budgetary deficit limit of 3 pct.
Lazea emphasized then that following the increase of the pension point to 1.265 RON from September 1, 2019 resulted in an additional deficit of around 3.3 billion RON or 0.3 pct of the GDP for the last four months of 2019 and of 10 billion RON for 2020 or 0.9 pct of the GDP. In his opinion, increasing the pension point to 1.775 RON, by 40 pct, will have as an effect an additional deficit of 10.6 billion RON or 0.96 pct of the GDP for the four months of the year 2020, namely 31.8 billion RON or 2.7 pct of the GDP for the entire year 2021. Thus, instead of a deficit of 3 pct of the GDP, just as an effect of the Pension Law Romania would have deficits of 4.5 pct of the GDP in 2020 and 5.7 pct of the GDP in 2021.
The pension point, the main indicator used for indexing pensions, rose by 15 pct in September 2019, from 1,100 RON, to 1,265 RON, and will increase by 40 pct in September 2020, in accordance with the Pension Law, to 1,775 RON.
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