Wednesday, September 17, 2008

Romania PM says approves pension hike from Oct

BUCHAREST, Sept 16 (Reuters) - Romania's centrist government will hike state pensions from next month instead of November, Prime Minister Calin Tariceanu said on Tuesday, noting good economic performance allowed the move.

The decision followed weeks-long pressure from the powerful leftist opposition, which threatened to file a no-confidence motion against the minority cabinet two months before parliamentary election due on Nov. 30.

"Because of very good economic performance, we can ensure the needed resources for state pension increase from October 1. This is not a social measure, it is the result of rightist policies," Tariceanu told reporters after he met Social Democrat leaders.

The government decided last year to almost double pensions via two hikes in 2008 and 2009, sparking concern among ratings agencies and economists over their potential impact on Romania's consumption-driven, overheating economy.

In July, Labour Minister Paul Pacuraru announced plans to speed up the implementation of the increases, starting some from November 2008 instead of January 2009, because of a surplus in the state pension budget.

Average monthly pensions in Romania are just over 100 euros.

Central bankers have warned that Romania's consolidated budget deficit may reach the EU's Maastrict ceiling of 3 percent of gross domestic product if the pension budget runs out of cash to fuel planned pension hikes.

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