Romanian govt to hike pensions by 12.5% from January -ruling coalition

The ruling coalition in Romania will increase the state pensions by 12.5% starting January and pay cash payments to low income pensioners throughout the year, party leaders announced late Monday (21 November). This is to help the country's most vulnerable deal with rising inflation.

Leaders of the three coalition parties agreed that cash payments for pensions below 3,000 lei per month will differ in size.

Additionally, pensioners earning less than 1700 lei per month will be eligible for social vouchers of 250 lei every two months, a new measure approved this year.

For Romanians aged over 60 and pensions below 2000 lei, an additional 1400 lei payment will be made as a special aid to energy bills. It will be divided into two tranches.

Nicolae Ciuca, Liberal prime minister, said "the period we are currently in is one marked by multiple international crises" and suggested that there must be a buffer to offset the effects of high inflation.

Marcel Ciolacu, leader of leftist Social Democrats, stated that the support package would cost 26.65 billion lei. It will also include indexing child benefits as well as income for veterans and widows at the inflation rate.

A monthly gross minimum wage of 3,000 lei will be added to the current salary, which is 2,550 lei. This move should bring some relief to 1.2 million Romanians.

The European Union collects around 30% of the gross domestic product as budget revenue, which is significantly lower than the EU average of approximately 46%. It spends most of this on wages, pensions, and subsidies.

From the 5.7% GDP estimate, the government will aim for a 4.4% consolidated deficit. The European Commission, the International Monetary Fund and rating agencies in Romania have all warned that the deficit and low revenue collection are major risks to the economy.

Romania is rated at the lowest level of investment by Moody's, Fitch Ratings, and S&P Global Ratings. Analysts predict that economic growth will be markedly slower in 2023.

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