The government approved on Wednesday the letter of intent that will be sent to the International Monetary Fund (IMF). During negotiations with the fund, Romania pledged to cut public sector salaries by 25 percent and pensions by 15 percent in order to reach a deficit of 6.8 percent of GDP in 2010. These measures do not affect the minimum wage or minimum social pension of RON 350. If cost reduction measures are not taken, the budgetary deficit will reach 9.1 percent of GDP, according to the government.
The austerity measures will not affect child benefit, and the parents of children up to the age of two will still receive their allowance. Neither will educational scholarships be impacted. Maternity pay will be reduced by 15 percent, but no mother will receive less than RON 800. The government will push through two laws. The first stipulates cost reductions in the budgetary sector to be made by the end of 2010.
The second law covers the regulation of special pensions. The government decided to take these steps in order to avoid suffocating the economy with tax increases. The austerity measures will be applied at the level of governmental agencies. The cabinet also intends to bring into force a program to prevent tax evasion and to adopt a draft law to give support to companies founded by young entrepreneurs.