Romanian Govt Approves IMF Letter, Pledging More Layoffs, Spending Cuts

These commitments are included in the additional letter of intent agreed upon with the IMF after its evaluation mission in late October, and approved in Tuesday's Government meeting.

The letter's main points are:

- Public sector layoffs will continue through next year;

- Taxes would be reduced only if economic growth creates sufficient "fiscal room;"

- Bonuses for public sector personnel will be capped and awarded only as budget resources allow and only for performance in tax collection;

- Unemployment aid will be set next year at 75% of the national reference social indicator and not calculated according to minimum wage, so that it would not increase once salaries are raised in 2011;

- In-hospital treatment will be limited next year to 10% of its 2010 level and the price markup paid for drugs used in treating cancer, diabetes, HIV/AIDS, TBC will be reduced to 1.5% for retail and 4% for wholesale purchases;

- The share of per-capita reimbursement of family doctors will be reduced from 70% to 50%, in favor of per-service reimbursement;

- The package of benefits provided by the Government will be reformed, with assistance from the World Bank, to exclude coverage of costly nonessential health services;

- To improve controls over the financial performance of the sector, the Government will cap the nominal amount of quarterly services contracted with hospitals, primary care doctors and pharmacies to budgeted amounts;

- The Government will prioritize programs receiving European funds when selecting new investments and the EU project Management Unit will be put under the Prime Minister's authority and empowered to take steps to accelerate fund absorption;

- The Government will ask the Council of the European Union to approve increasing the turnover or revenue threshold above which companies are required to register and pay VAT to EUR50,000 from EUR35,000;

- New criteria will be introduced for the classification of taxpayers by size into small, medium and large;

- Government Emergency Ordinance 50/2010 on consumer loans will not apply to ongoing contracts.

Romania and the IMF last year signed a EUR13 billion loan agreement, part of a larger EUR20 billion aid package that includes funds from the European Commission, the World Bank and other foreign lenders.

Late October, joint teams from the IMF and EU visited Romania to assess the country's progress under the agreement and decide whether to disburse new aid.

If you liked this story, please follow MEDIAFAX.RO on FACEBOOK »

The content of mediafax.ro is for your information only. Republishing or using this content is forbidden without express consent of MEDIAFAX. For this consent, please ask for it by mail at vanzari@mediafax.ro.