Wage Fund Reduction To Affect Both Central, Local Administration Sectors – Romanian President

Romanian President Traian Basescu said Thursday evening, after talks with the International Monetary Fund officials, the 25% decrease of the public sector salary fund will affect both the central and the local administration sectors.

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The president said public spending cuts are inevitable and highlighted authorities must speed up the state institutions' decentralization process.

Basescu said he hopes Government parties will uphold this spending cut program, otherwise taxes will have to be hiked.

Basescu said that talks with the IMF resulted in the "trust variant", where the Government will continue its program to massively reduce spending.

Basescu said the other variant, the "distrust variant" entailed an increase of the value added tax to 24% from 19%, an increase of the flat tax to 20% from 16% and to decrease salaries in the public sector, to fit within a budget deficit target of 6.7 - 6.8% of the GDP.

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