Romania’s Govt Estimates Pension, Wage Cuts Will Save RON10B

Romania’s Government estimates it will save RON5.39 billion in the second half of 2010, or 1.06% of the country’s GDP, due to the recently announced 25% public sector wage cut which come into force on June 1, says a document issued by the Finance Ministry.

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According to the document, the Cabinet also expects to save RON5.2 billion, or 1% of the GDP, due to the recently announced social aid cuts, which include a 15% cutback on pensions.

In last week's additional letter of intent to the standby agreement with the IMF Romania's Government indicated similar results, estimating it will save 1% of the GDP through the 25% cut of public sector salaries and 15% cut of pensions, and 0.03% of the GDP by reducing heating subsidies.

Joint teams from the IMF, the EU and the World Bank were in Bucharest until May 10 for the fourth review of Romania's performance under a EUR20 billion financial package signed last spring.

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