IMF Says Other Measures To Trim Romania Deficit Backed As Well

„We discussed a number of different options with the authorities, and would support the authorities if they had chosen this option or a different option… In the end, they have made this decision and we support the decision,” Franks told MEDIAFAX in an interview.

„The Government needs to decide … what’s the least painful way or what is the most efficient way for the economy to close that gap, and we respect that choice,” the IMF official said.

Franks said that both the IMF mission and the Romanian authorities proposed different options to lower the budget deficit to 6.8% of the gross domestic product from 7.3% of GDP in 2009.

„These options involved different mixes of expenditure cuts and revenue increase,” he said, adding that the Fund has come with balanced proposals that should have brought more revenue increases.

The Fund’s proposals included tax increases, but some of the options that the Government discussed at some point also included tax increases, the IMF official said. „In the end they made a decision that the best way to go forward will be to practically reverse the expenditure increases in recent years,” Franks said.

„The Government had the obligation to make sure that it adopts what is appropriate for the country and we support the fact that they are committed to do that,” he added.

Romania has pledged to cut public wages by 25% and reduce pensions and other social aid by 15% in an effort to keep the budget deficit in check.

The IMF and Romania agreed on a EUR13 billion stand-by loan, part of a EUR20 billion financial support package, which includes funds from the European Union and the World Bank.