IMF loan will lead to public sector pay cuts

Romania

The Romanian government has signed a loan agreement with the International Monetary Fund and European Union that will mean substantial cuts in public spending, cuts in public sector jobs and a freeze on pay. Our regional officer in Romania reports that the IMF has asked the Romanian government to freeze the public sector pay bill and allocate the additional income exclusively to investments. Over the next four years, the pay bill, which has more than doubled in the last three years, must be gradually reduced from 8% to 5% of GDP. The IMF requires that the cut in the pay bill is proportional to the contraction in Romania’s economy. The cuts could be carried out by slashing the bonuses of some higher paid employees and through redundancies.
Read more at > EU Observer (EN)

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