Thursday, May 27, 2010

DPA: Romanian government faces confidence vote on austerity policy

Bucharest - The Romanian government intends to push a drastic savings package through parliament even though it will amount to a vote of confidence on the Eastern European country's current government, Prime Minister Emil Boc said Wednesday.

The austerity measures include a 25 per cent cut in the salaries of civil servants and a 15 per cent decrease in pensions. The minimum wage of 600 lei (177 dollars) and minimum pension of 350 lei are exempted from the cuts.

Boc emphasized that the government does not consider tax increases to be an appropriate tool to balance its budget.

A decision from the cabinet on the salaries and pension cuts was expected on Wednesday evening. It will then be presented to the parliament.

The news led Romania's three largest unions to announce extensive protests, with plans for at least 400,000 teachers, public administration employees and health-care professionals to launch an indefinite strike on May 31 if the austerity measures are approved.

Protest rallies were reportedly planned nationwide.

Romania has promised the International Monetary Fund (IMF) to bring its budget deficit down to 6.8 per cent of its gross domestic product (GDP).

Which austerity measures had exactly been demanded by the IMF is still being debated. The agency's managing director, Dominique Strauss-Kahn, said recently that the IMF had opposed salary cuts and only supported tax increases in Romania's case.

Romanian President Traian Basescu disputed that during a televised speech on Tuesday night.

'If Mr Strauss-Kahn has doubts, I can show him the document (with the IMF demands),' he said.

Romania was granted a 20-billion-euro (25-billion-dollar) emergency loan in 2009 to shore up its state budget, which has been battered by the global economic crisis.

The IMF and European Union financial institutions are lending Romania the funds. The IMF controls the disbursement of the package's installments, depending on whether Romania has met the agreed-to saving measures.

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