Head of the IMF mission Jeffrey Franks says the Fund does not oppose the move but the hikes have to be calibrated in order not to affect the employers’ expenditures.
Prime Minister Emil Boc was authorized yesterday by the ruling coalition’s leadership to negotiate with the IMF the hiking of pensions and salaries in April, PDL Vice President Sorin Frunzaverde stated after the ruling coalition meeting on Monday morning, Mediafax informs. He pointed out that all members of the ruling coalition’s leadership agreed with the move, including the Prime Minister.
Asked what was the reason behind such a proposal and whether it has something to do with the protests seen in the last couple of weeks, Frunzaverde answered: “The reason is the very low living standards, not the protests, it’s the fact that the living standards are dramatically low.” After this statement, Frunzaverde was asked whether there are funds for this hike and where the money will come from. “Yes, from the budget,” he answered. In a press conference organized yesterday, head of the IMF mission to Romania Jeffrey Franks pointed out that the IMF does not oppose the hiking of the minimum salary but very precise calculations have to be made, Realitatea TV informs.
“At the same time, the hiking of the minimum salary may lead to a growth in consumption, which in turn has certain positive effects. As a consequence, there is need for caution when taking a decision on hiking the minimum salary,” he added.
Before Gov’t meeting, Prime Minister Emil Boc said yesterday the Executive will take into account a slight recovery in public sector wage indexation of pensions, but only conditioned by stability and growth, not to engage in populist measures that could destabilize the country.
In his turn, PDL First Vice President Gheorghe Flutur stated yesterday that the hike was included in the letter of intent that the government filed to the IMF in December 2011. “We always had this goal, we didn’t take this decision because of the protests,” he stated before PDL’s Permanent National Bureau (BPN) meeting.
Likewise, Labor Minister Sulfina Barbu stated that pensions and salaries can be hiked by 5 per cent at most, provided there is economic growth. Labor Minister Sulfina Barbu stated yesterday in Parliament that there is the need for an economic growth of 1.8 to 2.3 per cent in order to hike pensions and salaries by a few percentage points, namely by 5 per cent at most. “Unless we have an economic growth that would give us the needed resources, we won’t borrow again in order to hike salaries and pensions because that’s not possible. We hope that this economic growth will be sustainable and will allow us to do what we discussed last autumn,” Sulfina stated.
At the same time, Sulfina Barbu underlined the fact that all of Europe is affected by the economic crisis and Romania is “strongly dependent” on the Euro Area in what concerns exports, orders and industrial production.
Also, Dumitru Costin, President of the National Union Bloc, expressed his skepticism. “The resources are extremely limited, if we manage to win a tempo in relation with the IMF and the European Commission we will have the guarantee that measures that will benefit from financing irrespective of what happens politically may be included in a supplementary agreement, that Romania will have clear, financed and sustainable measures in the labor domain,” Costin stated. He proposed to the IMF delegation measures that concern modern and efficient labor market management and measures for vulnerable groups, namely the youth, those over 45 years of age and those living in rural areas.
A point worthy of taking into account is that the government’s plan to hike salaries and pensions is illegal from the point of view of the fiscal-budgetary responsibility law that Romania adopted at IMF’s requests. First of all, the 2012 budget entails frozen pensions throughout the year, with no clues pointing to their hiking. This restriction also concerns the social insurances’ budget law. Moreover, the law on fiscal-budgetary responsibility also stipulates that total expenditures on personnel cannot be hiked during the fiscal year.
USL: Ruling power using bribery on the last stretch, on the Ceausescu model
PNL President Crin Antonescu stated yesterday ahead of the Central Political Bureau’s meeting that the ruling power is desperate and is trying to resort to bribery on the last stretch, or at least to keep hope alive, as did Nicolae Ceausescu in the last days of December 1989. “I really doubt that Romanians are waiting for 3 per cent, 5 per cent, 7 per cent from Boc. I believe they are waiting for this ruling power to leave sooner or later,” Antonescu stated. He reiterated USL’s criticisms in what concerns the austerity measures adopted by the ruling coalition. “For a year and a half we’ve been saying that the absurd measures of cutting salaries by 25 per cent and of subsequently hiking the VAT are measures unlike any other taken in Europe. They could have been avoided. We were constantly told that they did the right thing, that it was the only way, that we are populists. Now I see it’s possible,” Antonescu said. PSD President Victor Ponta shared that view, stating yesterday that the opposition does not oppose the hiking of salaries and pensions, however the effect of such a measure would be “the same as the one that the 100 Lei offered by comrade Ceausescu had.” Ponta stated that a dialogue between the ruling coalition and the opposition on the issue of salaries and pensions is necessary, adding that there are ways of reallocating funds for the hiking of salaries.
UNPR: We will ask for public sector salaries to return to 2010 levels
UNPR will ask on Thursday, when it is set to meet the IMF, WB and EU delegation, for public sector salaries to return to 2010 levels, UNPR President Marian Sarbu rejecting any criticism that this measure represents populism. “The Romanian government has adopted structural adjustment measures for two years. The population has suffered because of these measures, that is why if we and the IMF find sufficient fiscal room for such a measure then in our opinion the measure won’t have anything related to populism in it, nor would it endanger in any way the budget stability that is absolutely necessary this year,” the UNPR leader concluded.
Romania, a ship that came out of one storm and enters another
Romania is like a ship that has weathered off one storm, underwent some repairs but is heading towards another one. That is how Jeffrey Franks, head of the IMF mission to Romania, characterized the evolution of the Romanian economy, money.ro informs. Franks also talked about the situation on the labor market, where the number of unemployed persons has dropped insufficiently. The main problem that Romania faces is very low productivity in certain sectors of the economy, such as agriculture. At the same time, he also talked about social benefits that, in his view, need not be lowered but have to be properly distributed to those that really need social aid and subsidies. “IMF does not consider that Romania spends too much on social benefits. It considers that Romania has spent money on social benefits inefficiently,” the head of the IMF mission stated.
The good news for 2012 is that Romania will register economic growth, the bad news is that this growth will not be able to lead to a hike in the living standards, Jeffrey Franks stated for Realitatea TV. Nevertheless, he opined that Romania is on the right track although there are still a lot of challenges to face.
Ialomitianu: Price of natural gas and energy renegotiated with IMF
At the same time, Finance Minister Gheorghe Ialomitianu stated yesterday that he is handling the negotiations with the IMF and that the financial outlook for 2012 “concerning the renegotiation of the price of natural gas and energy” is on the negotiations table. He pointed out that he is preoccupied with what is going on in the Euro Area because any change in budget deficits and public debts there also impacts Romania.