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| LIFE AFTER THE IMF 11/05/2010 |
| (2010-05-11) |
| Last updated: 2010-05-12 13:54 EET |
The Fund has stated that it will make the next payments of the loan only after the government has implemented the austerity measures designed to curb public spending. As summarised on Thursday by president Traian Basescu, who once again took over the tasks of prime minister Emil Boc, those measures include a 25 per cent cut in public sector salaries, a 15 per cent cut in pensions and unemployment benefits, reductions of subsidies and other forms of social assistance and of the number of public sector employees. The alternatives, Basescu says, would have been to increase the flat tax rate and the VAT, which would have had a devastating impact on private companies, or to get new foreign loans, putting the next generations under the burden of increased debts.
At the end of yet another assessment mission, during which he learned Romanian, the head of the IMF delegation, American Jeffrey Franks, said that all those measures should be conducive to economic recovery.
He said that quote: "the package of measures proposed by authorities and supported by the IMF was tough, but necessary. With firm implementation, those measures will take Romania out of the crisis throughout 2010. Jeffrey Franks said that the IMF was forecasting an economic growth rate around or even below zero, but going up to close to 3.6 per cent in 2011.”
What Franks did not say, but newspapers in Bucharest did disclose, is that a supplementary memorandum of agreement was signed by the IMF and the Romanian government, which pledges to freeze early retirement and levy taxes on meal vouchers, dividends and bank account interest gains. The general irritation is enhanced by the feeling that that may be only the tip of the iceberg. Economic analyst Aurelian Dochia says for the daily paper EVENIMENTUL ZILEI that the measures already taken would only delay the implementation of other unpopular measures, such as an increase in taxes and charges.
Trade unions have already taken to the streets staging rallies, marches and picketing, in preparation for the public sector all-out strike they have scheduled for the end of this month. The Social Democratic Party in opposition firmly rejects this shock therapy, which it labels as “social genocide.” The National Liberal Party is working on a no-confidence motion against the Democratic Liberals and the Democratic Union of Ethnic Hungarians in Romania, which make up a government that they accuse of cynicism and incompetence. The diagnosis is shared by the daily paper ROMANIA LIBERA, which has so far backed the current rulers. “The nondiscriminatory salary and pension reductions have brought to light the most unbelievable official explanations, along with unmistakable proofs of cowardice and defiance,” the paper writes. The same paper adds that what Basescu has told Romanians is that they must all suffer, because, in order to protect their cronies, quote “Emil Boc’s ministers failed to operate the needed personnel and salary reductions in due time.” Unquote.
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