EU Warns 25% Pay Cut At Romania Ctrl Bank Breaches Treaty - Sources

"The Commission sent a note to Mihnea Motoc, Romanian Ambassador to the EU, indicating that the failure to amend the law cutting the salaries of central bank's employees could prompt it to initiate the infringement procedure, because the law breaches EU Treaty regulations regarding financial autonomy of central banks," the people privy to the matter told MEDIAFAX.

The 25% salary cut also infringes a memorandum of understanding Romania has recently signed under a EUR20 billion multilateral financial aid package, they added.

Early July, the European Central Bank urged the authorities in Bucharest to reconsider the salary cut for central bank staff, warning that the measure would be in direct violation of the principle of central bank independence.

Moreover, standing EU regulations prohibit governments to use central banks to finance public spending, ECB said in a legal note.

Romania's government recently adopted a series of harsh fiscal and social measures aimed at slashing spending and reducing the budget deficit, including the 25% pay cut for public employees and a 15% drop in pensions, which was later annulled in court.

According to ECB, Romania is not formally the employer of the central bank and, under the bank's statute, its staff is paid from the central bank's own resources.

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