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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