Romania Starts Austerity Talks with IMF

World | July 26, 2010, Monday // 14:26|  views

An IMF delegation started out negotiations Monday with Romanian authorities to review draconian measures to reduce state spending.

Romanian finance minister Sebastian Vl?descu was confident that talks will be quick and the new IMF installment will arrive to the crisis-stricken country soon.

IMF representatives commented in Bucharest that the austerity introduced by the Romanian government about a month a go have both ups and downs.

“The issue is whether those measures will be capable of regenerating trust in Romanian economy,” said they.

One of the IMF conditions it to reduce budget deficit to 6.8% of GDP from 7.2% for 2009.

In the beginning of July the IMF granted Romania an EUR 913 M loan in return for introduced anti-crisis measures. The Romanian government effected shock raise of the value-added tax from 19% to 24% as of July 1, and cut all budget sector salaries by 25%. It also went for a 25% tax on lottery sums, and a 16% tax on deposit interest income.

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Tags: Romania, IMF, IMF loan, austerity measures, economic crisis, budget deficit

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