Romanian Govt To Discuss Central Bank Salaries In September

The law concerning measures necessary to re-establish budgetary balance, adopted at the end of last month, provides a 25% cut in public sector salaries, which also applies to the employees of the National Bank of Romania (BNR).

The salary reduction was enforced through a law, which can only be amended for quick application through an emergency ordinance. However, the Government may not issue emergency ordinances until September, when the Parliament convenes a session.

The European Commission warned it might initiate infringement proceedings against Romania unless the government renounces a 25% pay cut for central bank staff, people familiar with the matter said last week.

"The Commission sent a note to Mihnea Motoc, Romanian Ambassador to the EU, indicating that the failure to amend the law cutting the salaries of central bank's employees could prompt it to initiate the infringement procedure, because the law breaches EU Treaty regulations regarding financial autonomy of central banks," the sources said.

The 25% salary cut also infringes a memorandum of understanding Romania has recently signed under a EUR20 billion multilateral financial aid package, they added.

Early July, the European Central Bank (ECB) urged the authorities in Bucharest to reconsider the salary cut for central bank staff, warning that the measure would be in direct violation of the principle of central bank independence.

Moreover, standing EU regulations prohibit governments to use central banks to finance public spending, ECB said in a legal note.

Romania's government recently adopted a series of harsh fiscal and social measures aimed at slashing spending and reducing the budget deficit, including the 25% pay cut for public employees and a 15% drop in pensions, which was later annulled in court.

According to ECB, Romania is not formally the employer of the central bank and, under the bank's statute, its staff is paid from the central bank's own resources.

If you liked this story, please follow MEDIAFAX.RO on FACEBOOK »

The content of mediafax.ro is for your information only. Republishing or using this content is forbidden without express consent of MEDIAFAX. For this consent, please ask for it by mail at vanzari@mediafax.ro.