Moody’s: Romania Should Up Public Sector Efficiency

„Higher public sector productivity allows for higher wages and allows more people to work in the private sector, which is the primary generator of long term economic growth,” Moody’s analyst Kenneth Orchard told MEDIAFAX.

Orchard declined to comment on whether the Romanian public sector needs massive restructuring, but said the public wage bill as a percentage of the gross domestic product is currently well above the average.

„The wage cuts passed on Tuesday will reduce the wage bill much closer to the average,” he said.

Romanian government recently announced a series of austerity measures to slash spending and lower the budget deficit to 6.8% of GDP in 2010, from a gap of 7.4% of GDP last year.

The unpopular measures, including a 25% cut in public salaries and 15% drops in pensions and other social benefits, have been heavily contested by opposition parties and unionists.

The leftist Social Democrats challenged the measures at the Constitutional Court, which is yet to pronounce itself on the issue.