BUCHAREST, Romania: Romania's President Traian Basescu approved a parliamentary proposal Wednesday to raise pensions by 43 percent in 2008, despite concerns that the measure could increase the budget deficit.
Basescu, who had threatened to veto the bill unless the government could prove the measure was sustainable, said the Cabinet failed to show where the funds to cover the raise would come from, but he was signing the bill anyway to help retirees.
"The government must now reduce public spending to ensure the (pension) law does not affect the development of the country," Basescu said.
He added that he was concerned because the measure would cost €30 billion (US$41 billion) until 2013.
The government has said Romania can afford the pension hike because its current economic boom is projected to continue beyond 2013, adding that it has no intention to raise taxes.The average pension will increase from 396 lei (US$180, €130) to 568 lei (US$260, €190)