„Romania cannot afford a Mercedes Benz public sector, it can afford a Dacia public sector,” IMF mission head Jeffrey Franks told a news conference in Bucharest.
„And there’s nothing wrong with Dacia,” he added.
Franks said the IMF is „acutely aware” that Romania is one of the poorest countries in Europe, but that the salary freezes in the public sector will have benefic effects on the long run and will help bring the deficit down.
The public spending must be limited and the Romanian government chose to mix job slashing in the public sector with salary cuts, the IMF official said, underscoring that the government has the final say regarding both layoffs and salary freezing.
Franks said the revival of Romanian economy will not be based on internal demand, which has increased beyond the publics means in the past years, but on exports, and the process may be very painful.
Romania’s wage bill must be lowered to 7% of the gross domestic product from 9%, Franks added.