IMF Rejects Romanian Minimum Wage Raise To Over RON650

During talks with the IMF, the Romanian Government coalition leaders put forward several propositions, such as increasing the minimum wage from RON600 to RON700, lowering social contributions to 41% from 44% and reducing the flat tax rate to 12% from 16%.

The head of the International Monetary Fund mission to Bucharest, Jeffrey Franks, said recently that there might be room for an increase of the Romanian minimum wage, but any decision in this respect should be carefully analyzed, as a too high increase could have negative effects.

An IMF mission is currently in Bucharest to review Romania's progress under the stand-by arrangement, which was approved in May 2009. The IMF loan is part of a larger financial package that also includes funds from the European Commission, the World Bank and other international lenders.

Romania received so far around EUR11.5 billion in IMF money and EUR3.6 billion from the EU. According to the terms of the IMF deal, the country should receive mid-December the seventh installment worth some EUR870 million.

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