Tuesday, January 12, 2010

Romania parliament gears up to pass 2010 budget this week

By Radu Marinas

BUCHAREST, Jan 11 (Reuters) - Romania's two-house parliament will start debating a cost-cutting 2010 budget from the centrist government on Monday and likely approve it this week, a key condition to unlock a stalled 20 billion euro IMF-led aid deal. 

Analysts say a quick endorsement of the bill, which envisages freezing state pensions and wages together with other painful reforms including mass layoffs, will help Bucharest receive 3.3 billion euros worth of IMF and EU funds in February.

The International Monetary Fund is expected to resume review talks on the deal -- halted in November because of wrangling ahead of a hotly-contested presidential poll -- on Jan. 21.
Politicians say the budget, on which the leftist and liberal opposition filed thousands of amendments, asking for a 12 percent hike in pensions, would pass with minor changes including probably some redistribution of sums among ministries.

"It has a chance to pass parliament as early as Wednesday," Ion Ariton, head of senate's budget committee told Reuters by telephone ahead of a 1400 GMT deadline for the talks kick off.

Both the powerful leftist opposition Social Democrats and the Liberals said they would vote against the bill which they believe would erode Romanians' purchasing power, now at less than half of the European Union's average.

The ruling Democrat-Liberals of Prime Minister Emil Boc control a slim majority together with their ethnic Hungarian partners and other independent deputies, which analysts said should be enough to ensure the needed support for the bill.

The belt tightening, which aims to cut the fiscal deficit to 5.9 percent of gross domestic product from 7.3 percent in 2009, is essential to help Romania fight deep recession.
Along with other tough measures including up to 100,000 job cuts in the public sector, austerity is key for Romania to claw its way back from an expected 7 percent economic contraction last year and create conditions for a 1.3 percent recovery in 2010.

Officials said envisaged furloughs for 2010, are not anymore on the cards: "There will be no furloughs next year ... Because of frozen wages, we don't need such a measure," Economy Minister Adriean Videanu told a private television.

The cabinet sent the entire public sector on a 10-day furlough in late 2009 to tackle the costs of running a sector totalling 1.3 million employees, which makes up a third of all Romanian jobs.

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