Romanian Govt To Set Salary Fund For State-Owned Cos – Act

The measure represents one of the amendments targeting the legislation of state-owned companies and it must be implemented until the end of June 2010.

Under the new laws, state-owned companies will have to present their draft budgets to the government within 15 working days after the state budget is published, while negotiations on collective labor contracts will be banned until the approval of annual budgets of state-owned companies, including salary fund ceilings.

The new rules will also ban the transfer of money earmarked for capital expenses to operating expenses and breaching budget provisions or contracts of management performance will trigger automatic penalties (personal and institutional).

State-owned companies that request additional funds from the state budget or breach tax rules will have to sign an adjustment program with the government, stipulating the measures they will take to improve their financial status, as well as penalties and restructuring measures in case of failure to observe terms and conditions.

Romania and the IMF signed in May a EUR12.95 billion two-year standby arrangement, as part of a EUR19.95 billion financial support package that also includes funds from the European Commission, the World Bank, and the European Bank for Reconstruction and Development.

Romania has already received a first tranche of EUR5 billion from the IMF, while the next two installments, or EUR1.9 billion and EUR1.5 billion, are due for September and December, respectively.