The Challenges to Long Run Fiscal Sustainability in Romania

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 lar...

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Bibliographic Details
Main Authors:	Canagarajah, Sudharshan, Brownbridge, Martin, Paliu, Anca, Dumitru, Ionut
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ACCOUNTING ACCUMULATION OF ARREARS ADVERSE CONSEQUENCES ANNUAL REPORT ARREARS BALANCE SHEETS BASIS POINTS BENEFICIARIES BORROWING COSTS BORROWING REQUIREMENTS BUDGET CONSTRAINT BUDGET DEFICIT BUDGETARY RESOURCES CAPITAL MARKET CAPITAL MARKET DEVELOPMENT CDS CENTRAL GOVERNMENT CONTINGENT LIABILITIES CORPORATE INCOME TAX CREDIT RATING CREDITOR CUSTOMS UNION CUTTING EXPENDITURES DEBT BURDEN DEBT CRISIS DEBT DYNAMICS DEBT LEVELS DEBT SERVICING DEBT SERVICING COSTS DEBT SUSTAINABILITY DEBTS DEMOCRACY DEMOGRAPHIC DEMOGRAPHIC CHANGE DEMOGRAPHIC CHANGES DEVELOPMENT BANK DOMESTIC CURRENCY DOMESTIC DEMAND DOMESTIC MARKET DOMESTIC SAVINGS ECONOMIC CRISIS ECONOMIC FORECAST ECONOMIC GROWTH EMERGING MARKET EMERGING MARKET COUNTRIES ENTITLEMENTS EUROBOND EXCHANGE RATE EXPENDITURE EXPENDITURE CUTS EXPENDITURE OBLIGATIONS EXPENDITURES EXPORT GROWTH EXPOSURE EXPOSURE TO RISK FINANCIAL AFFAIRS FINANCIAL CAPACITY FINANCIAL CRISIS FINANCIAL PERFORMANCE FINANCIAL STATEMENTS FINANCIAL SUSTAINABILITY FISCAL ADJUSTMENT FISCAL ADMINISTRATION FISCAL BALANCE FISCAL BALANCES FISCAL CONSOLIDATION FISCAL COSTS FISCAL CRISIS FISCAL DATA FISCAL DEFICIT FISCAL DEFICITS FISCAL IMPLICATIONS FISCAL INFORMATION FISCAL MANAGEMENT FISCAL OBLIGATIONS FISCAL POLICIES FISCAL POLICY FISCAL POSITION FISCAL PROJECTIONS FISCAL RETRENCHMENT FISCAL STANCE FISCAL STATISTICS FISCAL SUSTAINABILITY FISCAL SYSTEM FIXED INTEREST FIXED INTEREST RATE FOREIGN CURRENCY FOREIGN INVESTORS FOREIGN SHARE FRAUD GENERAL TAXATION GOVERNMENT BUDGET GOVERNMENT DEBT GOVERNMENT DEFICITS GOVERNMENT REVENUE GOVERNMENT SUBSIDIES GROSS DOMESTIC PRODUCT GROSS PUBLIC DEBT GROWTH RATES HEALTH INSURANCE HOLDING HUMAN CAPITAL IMPLICIT TAX INCOME TAX INCOME TAXES INFORMAL ECONOMY INSURANCE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL FINANCIAL MARKETS INTERNATIONAL MARKET INTERNATIONAL MARKETS INVESTOR CONFIDENCE ISSUANCE LEGAL OBLIGATIONS LEGAL TAX RATE LEGAL TAX RATES LOAN LOAN GUARANTEES LOCAL BANKS LOCAL GOVERNMENT LOCAL GOVERNMENTS LONG-RUN DEBT LONG-TERM COSTS MACROECONOMIC PROJECTIONS MACROECONOMIC STABILITY MATURITY MATURITY STRUCTURE MEDIUM-TERM FISCAL FRAMEWORK MEDIUM-TERM PROJECTIONS MONETARY FUND MONETARY UNION MULTILATERAL LENDERS NATIONAL AGENCY NET WORTH OLD-AGE OLD-AGE PENSIONS OUTPUT OUTPUT GAP OUTSTANDING PUBLIC DEBT PENSION PENSION EXPENDITURES PENSION FUND PENSION LAW PENSION REFORM PENSION REFORMS PENSION SCHEME PENSION SYSTEM PENSION SYSTEMS PENSIONS PERSONAL INCOME PERSONAL INCOME TAX PORTFOLIO POVERTY REDUCTION PRIVATE BANKS PRIVATE PENSIONS PRIVATE SECTOR PROGRESSIVE TAXATION PROVISIONS PUBLIC PUBLIC AGENCIES PUBLIC DEBT PUBLIC DEBT MANAGEMENT PUBLIC ENTERPRISE PUBLIC EXPENDITURE PUBLIC EXPENDITURES PUBLIC FINANCE PUBLIC FINANCES PUBLIC PENSION PUBLIC PENSION SYSTEM PUBLIC PENSIONS PUBLIC POLICY PUBLIC POLICY OBJECTIVES PUBLIC SECTOR PUBLIC SECTOR DEFICITS PUBLIC SECTOR WAGES PUBLIC SERVICES PUBLIC SPENDING RAPID GROWTH REAL GROWTH REAL GROWTH RATE REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES REPLACEMENT RATES RETIREMENT AGE RETIREMENT AGES REVENUE COLLECTION SECURITIES SOCIAL CONTRIBUTIONS SOCIAL INSURANCE SOCIAL INSURANCE FUNDS SOCIAL SECURITY SOCIAL SECURITY CONTRIBUTIONS SOCIAL SECURITY SYSTEM SOCIAL WELFARE SOLVENCY SOVEREIGN DEBT STATE OWNED ENTERPRISES SUSTAINABILITY ANALYSIS SUSTAINABLE ECONOMIC GROWTH SUSTAINABLE FISCAL POLICY TAX TAX ADMINISTRATION TAX BASE TAX COLLECTIONS TAX EFFORT TAX EVASION TAX POLICY TAX RATE TAX RATES TAX REVENUE TAX SYSTEM TOTAL DEBT UNCERTAINTY WAGE EXPENDITURES
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120103111719 http://hdl.handle.net/10986/3213

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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.

The Challenges to Long Run Fiscal Sustainability in Romania

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