Public wage recovery of 16 percent widens Romania’s deficit to 2.5 percent of GDP, says NBR adviser

Newsroom 24/04/2012 | 15:42

Bringing wages of employees in the public sector to pre-crisis levels would add 0.6 percent to the budget deficit, according to Lucian Croitoru, monetary policy adviser of governor Mugur Isarescu at the National Bank of Romania (NBR). This statement was made today during the third credit risk conference organized by credit risk firm ICAP Romania and Cycle European.

Croitoru said Romania’s current debt of 33 percent of GDP seems to be sustainable and the level of debt in households and the corporate sector remains low.

“The deficit was estimated at 1.9 percent at the beginning of his year, now politicians start talking about a 16 percent increase in public wages, to bring wages back to levels of July 2010. This possibly would move the deficit from 1.9 percent to 2.5 percent,” said Croitoru.

Romania started in 2010 a massive austerity plan in order to keep macro-economic stability, and took out a EUR 20 billion rescue package from the IMF. Wages in the public sector were cut by 25 percent and more than 100,000 jobs were lost. At present, a recovery of public wages is taken into consideration by the ruling center-right government.

Ovidiu Posirca                  

Photo Source: EPA

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