Prima pagină » English » IMF: Romania Had More Balanced Options To Tame Deficit

IMF: Romania Had More Balanced Options To Tame Deficit

The International Monetary Fund recommended a series of “balanced” measures to lower Romania’s growing budget deficit, but the authorities in Bucharest decided to rely almost entirely on public spending cuts, IMF’s mission chief for Romania Jeffrey Franks said.
IMF: Romania Had More Balanced Options To Tame Deficit
11 mai 2010, 15:12, English

„We had looked at a number of different options, and most of our proposals were more balanced between revenues and expenditures,” Franks said in an interview Monday.

„The government made the decision to go ahead with this particular approach (to reduce expenditure).”

Asked if the government’s measure to cut public wages by 25% was necessary, Franks said the weak economic development in the first months of the year called for decisive action to prevent the budget deficit from running amok.

„The government found itself in a difficult situation because the revised forecast for the deficit for 2010 with no action would have put the deficit at about 9% of GDP,” Franks said. „So serious action was required.”

Late last week, Romanian President Traian Basescu announced a series of austerity measures, including the 25% salary cut in the public sector, as well as a 15% decrease in pensions and unemployment benefits.

The IMF stressed the measures were developed by the Romanian authorities and were not proposed by the Fund.