The challenges to long run fiscal sustainability in Romania, Vol. 1 of 1

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The challenges to long run fiscal sustainability in Romania

Author:	Canagarajah, Sudharshan; Brownbridge, Martin; Paliu, Anca; Dumitru, Ionut;	Collection Title:	Policy Research working paper ; no. WPS 5927
Country:	Romania;	Date Stored:	2012/01/03
Document Date:	2012/01/01	Document Type:	Policy Research Working Paper
Language:	English	Region:	Europe and Central Asia
Report Number:	WPS5927	SubTopics:	Emerging Markets; Debt Markets; Public Sector Expenditure Policy; Fiscal Adjustment; Public Sector Economics
Volume No:	1 of 1

Summary: Romania, along with many other countries in the European Union, faces daunting fiscal challenges. Fiscal balances deteriorated sharply following the global economic crisis, forcing Romania to implement a fiscal consolidation that was one of the largest in the European Union, but which may not be sustainable without a recovery of economic growth. Although the ratio of public debt to gross domestic product is still relatively modest, at around 35 percent, long-term fiscal solvency is threatened by the costs of funding the public pension system in the face of adverse demographic shifts over the next 50 years. Because of widespread tax evasion, the tax system in Romania is one of the least efficient in the European Union. Tax reforms that can reduce the amount of tax lost to evasion and fraud could make a major contribution to enhancing fiscal sustainability.


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