Romania Debates Austerity Budget

Romania’s Prime Minister Emil Boc says he expects parliament to adopt the budget for 2010 by 15 January. The budget is key to the continuation of an International Monetary Fund, IMF, led aid package, crucial for stabilising the country’s economy.

Parliament began debating the budget, that has already been negotiated with the key international lenders, on Monday. Boc urged parliamentarians to adopt the budget as it stands.

”The 2010 budget will help Romania emerge from the economic crisis, spur growth and improve living standards for Romanians,” he said. “2010 will be a better year than 2009, but we should not delude ourselves, as tough measures will have to be taken,” added.

The draft foresees a reduction in the public deficit from 7.3 per cent of GDP in 2009 to 5.9 per cent. It foresees a freeze in public sector salaries and pensions, as well as plans to lay off some 100,000 public employees, including 15,000 teachers.

If the draft budget is adopted in the form negotiated with international lenders, the IMF and European Commission could quickly lend new tranches worth around 3.3 billion euros. The lenders decided in November to postpone new disbursements, citing political instability.

Boc, who formed a new government at the end of 2009, has warned that Romania can no longer afford to “go ahead with the growth model developed over the past years, based on consumption and credits.”

However Social Democrat leader Mircea Geoana has urged lawmakers to preset all their amendments and fight for them “right to the bitter end”. Nevertheless, while lawmakers brought dozens of amendments, only a few of them have been endorsed by the parliament’s budget and finance committees.

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