Thursday, January 29, 2009

Romanian gov't to give €250 million to bank

Thursday, January 29, 2009

BUCHAREST, Romania: Prime Minister Emil Boc said Thursday that the government would provide €250 million (US$328 million) to a state bank to support small- and medium-sized businesses during the economic crisis.

He said the money would be paid to the state CEC bank to help finance businesses which are suffering in the global economic downturn. To encourage business he said that profit that was reinvested in business would not be taxed.

Boc was presenting the budget for 2009 that still needs to be approved by Parliament. The center-left coalition government has more than 70 percent of seats in the legislature.

Romania has seen economic growth of about 8 percent in the past three years. Growth is expected to be half that this year as the global economic crisis hits Romania.

Boc said that salaries and pensions would rise by five percent this year in line with inflation.

He said that as part of an austerity package the government would cut spending on state salaries by 20 percent. He said that there would be a reduction in overtime and extra benefits given to state employees.

"The objective is to tighten our belts in a year of crisis ... we want to get rods of (cost) that burden the budget."

Unemployment in Romania will increase from 4.4 percent to about 5.4 percent in 2009. Thousands of workers in heavy industry and the automobile industry have been laid off in recent months due to a drop in sales. The national currency, the leu, has lost about 20 percent of its value in the last year.

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