Friday, May 7, 2010

AP: Romania cuts wages, pensions, jobless payments

BUCHAREST, ROMANIA

Romania's president announced sweeping cuts to salaries of public sector workers, pensions and unemployment payments Thursday, as the country struggles to revive its ailing economy.

Traian Basescu said state sector wages would be cut by one-fourth, and pensions and unemployment payments by around 15 percent. There are about 1.3 million people employed by the state in Romania.

He made the announcement during a visit to Romania by an International Monetary Fund team to assess the country's economic performance. The IMF led a euro20 billion ($26.18 billion) bailout last year to help pay state salaries. The fund has warned that unemployment in Romania could reach 1 million this year.

The cuts take effect June 1. Basescu also denied that income tax and value added tax would increase, as had been reported this week.

Romania's economy, which is in a deep recession, has shrunk by 7.1 percent last year after three years of annual growth of about 8 percent.

Earlier this week, the central bank has cut its benchmark interest rate to a record low of 6.25 percent, the fourth time it has cut rates this year.

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