Ex-PM Cîțu warns Romanians to save money as new salary law looms

Former Romanian Prime Minister Florin Cîțu has urged citizens to save money, warning that a new unified salary law could lead to higher taxes and inflation. Cîțu expressed skepticism about the government's economic management, suggesting that socialists resort to tax increases to reduce deficits.

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Put money aside, you have to pay the extra billions for the unified salary law. Short term: higher taxes. Medium term: higher inflation, as they have already accustomed us. This is the only way socialists know how to reduce spending and the deficit as a % of GDP.

He recalled that last year's VAT hike was justified by the risk of a "junk" credit rating downgrade, despite the budget being built on economic growth and excluding the new salary law's costs. Cîțu argued that with a weaker economy and additional expenses, Romania should be closer to a downgrade, unless rating agencies are mere tools of government narratives.

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Today we have a weaker economy, worse prospects and additional expenses (at least 8 billion lei). Theoretically, we should be closer to a downgrade. But that would imply that rating agencies are independent and proactive, not instruments of government narrative.

Interim Labor Minister Dragoș Pîslaru reported that public sector salary demands exceed 20 billion lei, surpassing the PNRR budget allowance of 12.1 billion lei. The draft law, published by the Ministry of Labor, states that current salaries will be exclusively governed by the new law and cannot exceed its provisions. The ministry maintains the draft aligns with PNRR requirements and has fiscal approval, though parliamentary discussions may alter it.

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The requests coming from public sector institutions and unions regarding the new salary law exceed 20 billion lei, while the PNRR milestone allows for a budget impact of only 12.1 billion lei, equivalent to 7.3% of GDP.