Romania To Operate Budget Revision By End-Aug – Fin Min

"I told ministers that we must all cut expenses because we must take into account lowering revenues. Everyone must adjust their own budget according to the economic situation. Staff expenses will be cut by introducing a 10-day unpaid leave, not granting vacation bonuses and compensating overtime with vacation," Pogea said.

The budget revision issue was little discussed during the Government meeting Wednesday and might be analyzedon August 19, ministry sources told MEDIAFAX.

On Tuesday, Pogea said the Government will operate a budget revision in August and will cut wages, bonuses and services expenses by 4.5 billion lei (EUR1=RON4.2239), or 0.9% of the gross domestic product. On the other hand, the Government will incarese the budget of the Interior Ministry, funds for pensions and unemployment aid and state guarantees.

The Government has pledged “drastic” spending cuts on goods and services in the public sector, by 0.5% of GDP, according to an additional letter of intent to teh International Monetary Fund, which lent Romania EUR12.95 billion under a stand-by agreement.

The IMF agreed to allow Romania a budget deficit of 7.3% of the GDP this year, well above the initial 4.6% budget gap agreed in March, given a worse-than-expected economic contraction in the first half of the year.

Romania and the IMF signed in May a EUR12.95 billion two-year standby arrangement, part of a EUR19.95 billion financial support package that also includes funds from the European Commission, the World Bank, and the European Bank for Reconstruction and Development.

Romania has already received a first tranche of EUR5 billion from the IMF, while the next two installments, or EUR1.9 billion and EUR1.5 billion, are due for September and December, respectively.