A rise in taxes seems inevitable if the new government wants to support the real economy with resources from the budget, given the budget deficit will near 3 percent of GDP at the end of 2008, the Counselor of Romania National Bank (BNR) Governor, Lucian Croitoru, said. However, this measure comes rather late, he added.
“We only have two choices: we either reprioritize budgetary expenses or raise taxes,” Croitoru said. The first option is difficult to apply, considering that salaries are inflexible to drops, especially in nominal terms, in many public sectors.
