Romania takes austerity measures to cut wage, pension

13:30, May 31, 2010      

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The Romanian government decided on Sunday to adopt tough measures to cut its budget deficit so as to meet the agreed-on terms with the International Monetary Fund (IMF) for new loans.

The package will be sent to the parliament on Monday, which will decide on the calendar of the government's steps to implement the austerity measures.

The measures include cuts in public wages by 25 percent and public pensions by 15 percent as well as reductions in unemployment benefits.

Romanian Prime Minister Emil Boc said that the measures should correct structural deficits and make it possible for funds to be allocated to the private sector to boost economic development.

However, the package drew criticism from the opposition parties and the trade unions. The Social Democrats and the Liberals, the two opposition parties in the parliament, said they will vote against the bill, while teachers and public servants will stage a week-long protest on Monday.

According to the prime minister, the austerity measures will not affect the 600-lei (179-U.S. dollar) minimum salary and the 350-lei (104-dollar) minimum social pension, as well as the guaranteed minimum income and the scholarships.

He reaffirmed that the austerity measures would stay valid until Dec. 31.

Romania has agreed with the IMF on a deficit target of 6.8 percent of the GDP this year. The IMF stressed that it would disburse the fifth tranche of the stand-by agreement only after Romania implemented the cost-cutting measures.



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