The Romanian government will cut pensions and salaries in the public sector later this year to comply with the requirement of the International Monetary Fund (IMF) and the EU to reduce the size of its budget deficit to 3 percent of gross domestic product. This is a requirement that the fund set to award the country’s 20 billion rescue loan in 2009 According to Romanian President Traian Basescu program to reduce costs in the public sector was inevitable forward BBC. Wages in the public sector will be 25 percent lower this year, including the minimum wage there. Moreover, unemployment benefits and pensions fell by 15 percent. Romania and Hungary and Latvia, received a rescue loan from the IMF, World Bank, but the three countries currently fail to meet the requirement of the Fund to reduce its budgetary deficits. Romanian president has said to journalists that during the negotiations with the IMF mission in Bucharest government has managed to avoid an increase in VAT from 19% to 24% and increase taxes on profits and incomes of 20 percent from the current 16%.
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Lithuania will not adhere to the “painful” scheme for adopting the euro, which will shrink consumption and greatly harm the economy, said Prime Minister of the country Cubilus Andrews. The country probably will fail to meet EU requirements for the deficit within 3 percent of GDP by 2011, so the adoption of the euro can not happen before 2013, said in an interview yesterday, Finance Minister of Lithuania Ingrid Simon. “These are very ambitious and very painful measures, and, of course, there are any limits on what measures can enter,” said Cubilus. The aim is not to kill the entire economy and stability in society by reducing costs, salaries and pensions. Lithuania’s economy contracted by 14,3 per cent in the third quarter after the government took budget cuts, equivalent to 8 percent of GDP this year. Even after these stringent measures, the evaluation of the European Commission Lithuania will have a deficit of 9,7 per cent in 2011 to 9.8 per cent for this. Lithuania, whose currency – liras is tied to the euro should be introduced European single currency “as soon as possible, but the opportunities in turn have practical limits and practical measures should be introduced,” said Cubilus. The government has proposed the 2010 budget cuts of 5 percent of GDP, aimed at social welfare. Lithuania lags behind neighboring Estonia, which plans to join the eurozone from January 1, 2011, after years of using the government budget surplus for the establishment of reserves. This allowed the public finances remain intact even after the crisis hit the country.
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