The World Bank has initiated talks with the Romanian authorities to terminate the $90mn financing for the programme aimed at modernising the tax collection system (mainly IT infrastructure) as no progress has been reported, cursdeguvernare.ro reported quoting an answer provided by the World Bank officials. 

Improving its tax collection system is one of the most efficient steps Romania can take to prevent fiscal slippage. However, according to the World Bank statement sent to cursdeguvernare.ro, "There has been inappropriate implementation of the project over the past six months and no progress has been made towards achieving development goals.” 

The World Bank started working with Romania to improve its tax collection system back in 2013. At the time, the bank commented that Romania had made only modest gains in revenue performance during the 2004-2007 boom years, and this was followed by severe revenue losses during the ensuing recession. 

Now, however, sources close to the Romanian negotiating team with the World Bank say that the "technical disputes" between experts from the two parties on the implementation of the project, but they have been aggravated by the decision to set up the National Centre for Financial Information. Adopted by Mihai Tudose's government in 2017, the decision is perceived as "parasitising" the ANAF reform project.

Ratings agency Standard & Poor’s (S&P) highlighted the importance of improving VAT collection in its most recent country update. Rather than using one-time measures to prevent fiscal slippage, Romania's government will need to find ways to close the gap between value-added tax (VAT) owed and VAT collected, which is the widest in the EU, according to data from the European Commission, S&P commented.