| Funds for the Romanian economy 25/03/2011 |
| (2011-03-25) |
| Last updated: 2011-03-28 16:05 EET |
On Thursday, Romania received the last payment, worth 1.2 billion Euros, out of almost 5 billion Euros provided by the European Union. The European Commission made this decision after finding that Bucharest had met its commitments.
With this last payment, Romania has finalised the stand-by agreement signed two years ago, amounting to almost 20 billion euros. Bucharest gave up the last instalment from the IMF, of close to one billion Euros, which brings the total amount received by Romania to around 12.4 billion Euros. The money was originally intended to finance major investments and to strengthen the reserves of the National Bank of Romania.
But it was eventually spent, among others, on the payment of pensions and salaries. In exchange for the money, in order to prevent the collapse of the economy, the Government had to take a number of measures, viewed by foreign analysts as among the toughest in Europe.
Their application affected the population, and was criticised by the opposition and challenged in the street. The Government undertook to narrow the budget deficit from 7.2% in 2009 to 4.4% in 2011. Public sector salaries were slashed by 25%, the VAT increased from 19 to 24%, and close to one million state company employees were made redundant.
Authorities eliminated the special pension systems in several sectors, including the army, police and intelligence services. Furthermore, a number of heavily criticised laws were passed, such as the unified public sector wage scheme law, the Pension Act and the Labour Code. Meanwhile, measures have been taken to revive the economy.
After two tough years, early this month the president and the prime minister announced that the Romanian economy has been stabilised, that the necessary measures have been taken to ensure economic recovery and to pave the way for economic growth.
The head of state said Romania will focus on investments in several key sectors, including infrastructure, transport, energy and the IT industry, using, among others, European funds. In turn, the National Bank governor has warned that economic development requires an emphasis on work, rather than consumption.
And this, according to the central bank chief, can be achieved by encouraging investments that create new jobs, by increasing productivity, by enhancing the labour market flexibility and by reducing the fiscal burden that smothers enterprises.
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2025-04-03
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