The size of government in Moldova is at the average of Eastern Europe, with public expenditures reaching 38% of GDP in 2015. Moldova has recorded another, yet mild, recession in 2015, after years of growth. Public debt can still be considered as moderate, reaching 41% of GDP in 2015, but fiscal position of the public sector is increasingly unsustainable, exarcebated by an increase in the already high pension transfers. A stand-by arrangement with the IMF is expected to support another fiscal consolidation program. High recorded inflation is expected to be substantially decreased. SOEs are still present in many areas and hold monopoly status in some. Major government-controlled companies are public utilities and electrical distribution, but also the largest tobacco company, air carrier,
railway company and telecom operator. In 2014 and 2015, privatization was mostly done as a part of private-public partnerships. Since early 2016, the government is considering new plans for privatization of state companies. Although private companies are not legally discriminated against, these SOEs sometimes obtain preferential treatment in the market. Income tax is progressive, with tax rates of 7% and 18%, while corporate income tax is set at a low 12%. Regular VAT rate is 20%, while a limited number of products is taxed by the reduced rate of 8%. High social security contributions coupled with income tax lead to an overall high labour tax wedge.