The advanced pension rise of 30 percent could widen the budget deficit in Romania to up to 3 percent of gross domestic product next year, triggering inflation and a new boom in prices, warned analysts.
- Publicitate -
Labor Minister Paul Pacuraru announced last week that the pensions hike planned for January 1 2009 could be done in advance, on extra public pension funds of almost 500 million lei.
But the six-month social security budget surplus of 500 million lei does not guarantee supplementary funds in ten months from now. The advanced pensions rise starting with November will not have a big impact on inflation, but the question rises of whether this increase will also be sustainable next year, says Valentin Lazea, chief economist at Romania's national bank.
"It is clear that this announcement is an electoral measure because general elections will be held in November and the government wants to secure the pensioners' votes," believes Ionut Popescu, former Romanian finance minister.
Pacuraru announced in April that the pension point could be increased to 45 percent of the average salary, or 740-750 lei, before January 1 2009, if the social security budget ends the year with a surplus. The pensions hike could be advanced with a month or two, like it happened in the past two years.
The value of the pension point climbed to 37.5 percent of the average salary, or 581 lei respectively, starting November 2007, on budget surplus, although the increase was planned for January 2008.
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