March 14, 2015 / 11:35 AM / 3 years ago

Romanian finmin to keep key role in tax cuts despite investigation: PM

BUCHAREST (Reuters) - Romanian Finance Minister Darius Valcov will continue to play a key role in the government’s plans to cut all the country’s major taxes, despite becoming the subject of a corruption investigation, Prime Minister Victor Ponta said on Saturday.

Romanian Prime Minister Victor Ponta (R) looks on as new President Klaus Iohannis walks to takes his oath during a swearing-in ceremony in front of the Parliament in Bucharest December 21, 2014. REUTERS/Radu Sigheti

It was Ponta’s first reaction since anti-corruption prosecutors said late on Friday they had begun an investigation into Valcov. He is accused of favoring a company for a public works contract in exchange for about 2 million euros ($2.1 million) in his former post as a mayor.

“The government’s most important project in 2015 is the fiscal code, to which Darius Valcov had and will continue to have a determinant role,” Ponta said on his Facebook page.

“I want to ensure everyone this project will go forward at any cost and in any political context. The economic development of the country is directly tied to the approval and enforcement of this new code.”

It was unclear from the comments whether Valcov will remain finance minister of the European Union member state. The prime minister’s office did not elaborate.

Ponta and Valcov announced plans in February to cut all major taxes between 2016 and 2019, a move analysts said could take an unsustainable toll on the budget.

A first draft of a fiscal code that the government hopes parliament will approve by June shows policymakers plan to gradually cut the value-added tax, its flat tax on income and profit and its social security levies.

Valcov is also gearing up for potentially difficult talks in April with the International Monetary Fund over the IMF’s ongoing standby aid agreement with Romania.

Reporting by Luiza Ilie; Editing by Larry King

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