Romania to cut wages and pensions

IMF headquarters, Washington The IMF has also provided loans to Latvia and Hungary

Romania is to cut wages and pensions in the public sector later this year to comply with an IMF-led rescue deal.

Romanian President Traian Basescu said the "programme to cut public expenses was inevitable".

Public sector wages will be cut by 25% and all salaries, including the minimum one, will be affected. Jobless benefits and pensions will be slashed by 15%.

Romania is the recipient of a 20bn-euro aid package from the IMF, the EU and the World Bank.

The country, as well as two other bailed-out states, Latvia and Hungary, have missed targets for cutting their deficits by significant margins.

'Fat man'

"This [cuts] plan was inevitable," Mr Basescu told a news conference.

"The state sector is like a fat man of 200 kg sitting on the back of a 50 kg little man who is the real economy."

He also said that as part of negotiations with the IMF the country had narrowly avoided an increase in VAT from 19% to 24% and a rise in the tax on profits and income to 20% from 16%.

Meanwhile, the IMF said on Thursday it would extend a mission in Romania for two more days.

The IMF has cut its forecast for Romania's economic growth to 0.8% for this year, after the economy contracted 7.1% in 2009.

More on This Story

Global Economy

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.