IMF requires Romania's government to gradually cut the salary fund to 5% of GDP in four years

Publish date: 30-03-2009
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The representatives of the International Monetary Fund (IMF) asked the Romanian government to gradually reduce the salary fund from 8 to 5 percent of the gross domestic product (GDP) in the next four years, considering a constant GDP during this period, people close to the negotiations told NewsIn.

Unions took a stance against such a measure, arguing salaries could weigh from the current 8 percent to 10-12 percent of the GDP next year if the economy shrinks.

The representatives of IMF also required that the cut of wage fund is proportional to the economic contraction, in case Romania's economy reduces.

Both the IMF and the European Commission (EC) estimate Romania's economy will decrease by 4 percent this year and inch somewhere around 0 and 1 percent in 2010.

People close to the negotiations also said the cut of salary fund could be carried out by slashing some bonuses of the employees with large wages and by firing a part of the staff.

Romania will get about 13 billion euros from IMF and 7 billion euros from the European Commission, the World Bank and other European lenders to restart the engines behind the economy and cover holes until the end of 2010.

The interest paid by Romania will be 3.5 percent per year, considering the current market conditions. Thus, the two-year credit will be paid back by 2015 the latest, according to the agreement inked last week.


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