Romanian Govt Ordinance Enforces 20% Food Expense Cut For Institutionalized Children, Prisons Exempt

Article III, section 1 of Government Emergency Ordinance no. 55/2010 regarding certain measures aimed at cutting public expenses says that all public authorities and institutions must enforce a 20% expense cut on goods and services.

Article 2 of the ordinance, however, stipulates that certain expenses take exception to this rule, such as those related to relaying pensions and other types of welfare, healthcare and school rehabilitations. The budgets for the food of inmates are also exempt from the cut, unlike those which provide for the food of institutionalized children, elders and special needs individuals.

The expense slashes will be enforced during the second half of 2010.

Recession-hit Romania, which is relying on a EUR850 million installment of an IMF stand-by loan worth EUR13 billion, will enforce a series of measures aimed at cutting public expenses. Romanian President Traian Basescu promulgated Tuesday the two austerity laws, which stipulate a 25% wage cut for state employees. Another austerity measure, the 15% pension cut, was rejected by the Constitutional Court last Friday. In turn, the Executive resorted to its „Plan B” austerity measure and decided to increase the value added tax from 19% to 24% as of July 1, to keep the country’s budget deficit below the IMF-agreed cap of 6.8% of GDP.