IMF: Romania Public Wages Reduced To 2005 Level

Cutting public salaries was necessary to reduce expenditure, said Tonny Lybek, IMF representative for Romania.

Speaking at the launch of a report on Romania’s labor market, Lybek said state revenues amount to around 30% of the country’s GDP, well below 48% to 50% of GDP in other European countries.

According to Lybek, Romanian economy could grow by 1.5% in 2011, provided it honors the commitments assumed under its EUR20 billion international program.

The country’s biggest challenge is reducing its ballooning deficit, the IMF official added.

Romania and the IMF last year signed a EUR13 billion loan agreement, part of a wider aid package which includes funds from the EU, the World Bank and other lenders.

Under the loan agreement, Romania pledged to reduce its budget deficit to 6.8% of GDP this year, from 7.2% of GDP in 2009 and implement a series of fiscal measures to increase revenue and bring the economy back on track.