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| THE WEEK IN REVIEW 10-16/05/2010 |
| (2010-05-14) |
| Last updated: 2010-05-17 11:38 EET |
The head of the IMF delegation to Bucharest, Jeffrey Franks, said on Monday at the end of his two week assessment mission, that Romania is going through difficult times, and the economic downturn was caused by huge public spending in past years. He estimated that the package of measures proposed by the authorities will take the country out of the mire. Jeffrey Franks:
“The package of measures proposed by the authorities, which has our support, is tough but necessary. Provided they are firmly implemented, these measures will take Romania out of the crisis. For 2010 we estimate zero or negative growth, which will stand at approximately 3.6% in 2011.”
President Traian Basescu took the podium three times this week to explain to the general public the need for such drastic measures, if Romania wants to get the next installment of the joint IMF, EU and World Bank loan. Traian Basescu:
“I call on politicians, the media, trade unions and business people to tell me how could Romania borrow 11.7 billion Euros to cover its deficit, in the absence of an agreement with the IMF? I can assure you that we could not borrow much, and that would translate into the impossibility to pay salaries and pensions any longer.”
Basescu also said that the 25% and 15% cut in salaries and pensions respectively, starting June 1st, is absolutely necessary, because the state has no more resources to pay them in full. According to Basescu, the state needs 2.2 billion Euros to pay pensions, and it only has 1.7 billion. Another 2 billion Euros are needed for the payment of social benefits. He stated that budget spending must also be drastically cut, because it has doubled in the past 2 years.
The tough austerity measures taken by the government have triggered protests in the public, education and agriculture sectors. Trade unions have announced daily meetings, picketing and protest marches, and an indefinite all-out strike due to start at the end of June in the entire budget system. After meeting trade union and employers’ representatives, the head of state said that Romania couldn’t have possibly taken a better measure than the one agreed upon with the EU and the IMF.
The meeting was boycotted by the opposition Social Democratic, Liberal and Conservative Parties, which rejected the tough measures set forth by the government, and which came up with alternative solutions. The liberals call for a downsizing of the government to only 7 ministries, and the conservatives say that public administration procurement should cease, and also suggest the restructuring and privatization of state owned unprofitable companies. On the other hand employers’ Associations say that before cutting salaries and pensions, the Government should have taken measures that would truly stimulate the economy and bring more income to the budget, combined with measures that would curb tax evasion.
The figures presented this week by the National Institute of Statistics confirm that Romania’s economic situation is not at all good. According to the Institute, the economy is still in recession and in the first quarter of this year, after the GDP dropped by 0.3% as compared to the last three months of the past year, and by 2.5% as compared to the first quarter of 2009. The Romanian economy was hit by recession in the 3rd quarter of 2008. the annual inflation rate went up in April to 4.28% against the backdrop of more expensive non-foodstuffs and of higher prices for services. The trade deficit also rose in March by 28% for the first time in the past 15 months.
The Romanian President, Traian Basescu, has announced he will not sing into law the bill governing the activity of the National Integrity Agency if he discovers it contains abusive clauses that reduce its capacity to fulfil its mission and to helping dignitaries keep their wealth secret. Several NGOs have called on the Romanian President not to endorse the law passed on Wednesday by the Senate, saying that if the law came into force, the National Integrity Agency would be ‘devoid of substance’.
The institution was created in 2007 at the request of the EU, to check on the legality of the assets owned by people in decision making positions. Another law meant to regulate the activity of the National Integrity Agency has become compulsory after the Constitutional Court in April found several prerogatives given to the National Integrity Agency were unconstitutional.
A Romanian soldier was killed in Afghanistan on Wednesday while he was trying to defuse an anti-personnel mine to clear an access route. This is the 13th Romanian soldier to die on duty in Afghanistan since 2003, when Romania started to send troops to the region. Bucharest has increased the number of soldiers deployed to that country by more than 600; they joined the 1200 soldiers already present in Afghanistan where they are participating in international missions meant to provide security and stability in that country.
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