IMF Agrees To Scrap Plan Forcing Romania To Sack 150,000 State Employees – Sources

The quoted sources said the alternative agreed upon implies a drop in spending and wages, and each ministry will adopt specific measures to lower costs or to transfer funds.

They also said that the IMF’s goal is not laying off staff but cutting budget spending.

The same people said removing the figure of 150,000 state employees from the additional letter to the agreement doesn’t mean there won’t be any layoffs.

The Social Democratic Party will insist on finding money to prevent staff cuts for the sole purpose of lowering expenses.

As regards unpaid vacation for state employees, the social democrats obtained a period of ten days instead of the initial three weeks, the quoted sources said.

They mentioned that problems have come up regarding teachers, for it is difficult to say how many would take unpaid vacations without affecting classes.

The quoted sources said the IMF has not accepted the increase of the pension point by 2% as of October 1 and has even proposed the hike be postponed until Janury 1, 2010.

The Social Democratic Party insisted that the hike be scheduled for October 1, especially that the sum to be covered is not large, the sources said.

"The government must find sources for the money, as the sum is very low, and the commitment must be respected. One solution would be to lower investment expenses or to take money from other sources, but that will be discussed in the coalition on Monday," the sources said.

Party sources told MEDIAFAX Sunday that the social democrats asked the IMF to discard the requirement for the layoff of 150,000 state employees.

Party vice-president Constantin Nita said on Sunday evening, after an informal meeting, that the party will support the 2% pension hike and the elimination of the provision to lay off 150,000 state employees.

The IMF has been negotiating with the Romanian Government the layoff of 100,000 to 150,000 state employees until mid-next year, freezing pensions in 2009 and 2010 except the minimum social ones and wages, until the unitary pay law produces its effects, government sources told MEDIAFAX Saturday.

“At this moment the problem is laying off 100,000-150,000 employees in the central and local administration and in decentralized authorities. This entails saving 0.35% of the GDP for next year’s budget. The 2% pension hike scheduled for October is also suspended. Pensions will be frozen in 2010 too, with the exception of the minimum social pensions,” government sources told MEDIAFAX.

Romania currently has 1.4 million state employees.

The IMF delegation will present in a press conference on Monday at 13:30 local time the conclusions of the first evaluation of the stand-by loan agreement approved by the board of the institution in May.

Romania agreed with the IMF a EUR12.95 billion stand-by loan, as part of a EUR19.95 billion financial rescue package that also includes funds from the European Commission and other international institutions.

The first tranche, worth EUR5 billion, was released in May and entered the central bank’s reserve.