Romanian President: Pension Indexation Impossible When Deficit Hits EUR3.6B

The head of state pointed out in an interview broadcast Sunday that salaries cannot be hiked to the level previous to the summer of 2010, when the government implemented severe staff spending cut measures, as Romania still has a surplus of 200,000 state employees.

Basescu highlighted Romania must observe the requirements included in the financial agreements signed with the European Union and the International Monetary Fund, and added that abandoning these programs would be a blow harder than going back to recession.

The president called on the Government and Parliament not to renounce the targets set with the IMF and the World Bank.

The new pension law, adopted by the Government and in force since January 1, 2011, says people who worked in special conditions after April 1, 2001 would receive a 25% raise to their monthly scores (computed as the ratio of the individual gross salary and the average gross salary in that specific month), while a correction index would be applied to the yearly score of people who retire this year, computed as a ratio of 43.3% of last year's gross average salary and a pension point in effect at the time.

Both these raises were to take effect on January 1, 2012.

The Government's fiscal-budgetary strategy for 2012-2014 says, however, that they will be postponed until 2014, since they would entail additional expenses of about 865 million lei (about EUR203 million) for the social security budget.

(EUR1=RON4.2710)

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