Romania To Limit 2011 Public Sector Wage Fund To RON39B

People close to the matter told MEDIAFAX that over 140,000 public sector employees will be laid off by the beginning of 2011 to maintain staff spending within the limits agreed on with the IMF.

The number of public employees in Romania should be reduced by 250,000 people on the medium-term to match the numbers before 2006, Jeffrey Franks, head of the IMF mission to Romania said Monday.

Romania has cut a little over 36,000 jobs in the public sector between December 2008 and February 2010, bringing the total number of jobs to 1.36 million, according to Finance Ministry data.

Romania and the IMF have agreed to a budget deficit of 6.8% of GDP in 2010, from an initial target of 5.9% of GDP.

The IMF will only disburse the fifth tranche of the EUR13 billion stand-by agreement after the government implements the cost cutting measures. The government announced to slash public salaries by 25% and the pensions by 15% in order to keep the deficit in the new cap agreed with the IMF.

Joint teams from the IMF, EU and the World Bank were in Bucharest until May 10 for the fourth review of Romania's progress under a loan agreement. Romania's loan agreement with the IMF is part of a larger EUR20 billion package that includes funds from the European Commission, the World Bank and other foreign lenders.

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