ECB Slams Romania Again Over Central Bank Salary Cuts

„The ECB notes that the draft emergency ordinance maintains the decrease of the central bank’s salaries, although the Romanian State is not the formal employer of central bank staff,” ECB said in a note.

„Member states may not put a central bank in a position where it has limited or no control over its staff, or where the government of a member state can influence its policy on staff matters,” it added.

In July, ECB warned Romania that extending a 25% public salary cut to central bank staff would be a breach of the monetary financing prohibition stipulated by European laws.

Subsequently, the Romanian Finance Ministry requested ECB to deliver an opinion on planned amendments to the Law 118/2010 on certain measures necessary for the restoration of budgetary balance, including a provision that the central bank keeps some of the funds resulting from the salary decrease.

„The ECB understands (…) that certain salary rights are still intended to be and others have already been transferred to the state budget. For the latter, any such already transferred rights must be transferred back adequately to avoid any breach of the monetary financing prohibition in Article 123 of the EU Treaty,” ECB said in its opinion.

As to the funds not yet transferred to the state budget, the ECB notes that a decrease of staff salaries will de facto decrease the central bank’s operational costs, hence increasing its financial results leading to a potential increase in its financial resources.

„However, if this related increase of the central bank’s financial resources is directly transferred to the state, this would effectively mean increasing Romania’s funding at the central bank’s expense,” ECB said.

The Romanian government is expected to discuss the draft emergency ordinance amending Law 118/2010 later today, people familiar with the mater told MEDIAFAX earlier Monday.