IMF recommends tax reforms to strengthen Romania’s fiscal position

The International Monetary Fund (IMF) has recommended that Romania implement a series of tax reforms aimed at increasing fiscal revenues and addressing the country’s budget deficit. In its latest assessment, the IMF advised raising the standard Value Added Tax (VAT) rate, eliminating reduced VAT rates, and increasing excise duties.

Additionally, the Fund suggested that Romania transition to a progressive marginal personal income tax system, replacing its current flat tax model. According to the IMF, these measures are necessary to strengthen Romania’s fiscal position and ensure greater revenue stability.

Romania’s budget deficit has widened in recent years, driven by high public spending and underperforming tax revenues. The IMF’s proposals are intended to help the government stabilize public finances without resorting to broad spending cuts that could hinder economic growth.

The Fund emphasized that higher VAT and excise rates, coupled with a progressive income tax system, could improve revenue collection efficiency and align Romania’s fiscal framework more closely with practices observed in other European Union member states.

Romanian authorities have yet to formally respond to the IMF’s recommendations. However, the proposals are expected to prompt debate over potential impacts on consumption, investment, and income distribution within the country.