IMF Grants Romania Delayed Loan as Austerity Measures Kick In

Business » FINANCE | July 3, 2010, Saturday // 11:50| Views: | Comments: 0
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Bulgaria: IMF Grants Romania Delayed Loan as Austerity Measures Kick In A Romanian worker has the words 'I will commit suicide' written across his forehead as he takes part in a a rally in Bucharest, Romania, 19 May 2010. Photo by EPA/BGNES

The International Monetary Fund has agreed to grant to Romania the delayed fifth tranche of the bailout package for Bulgaria's northern neighbor.

The press service of the IMF has announced that the Fund Governing Board has made the decision to provide the delayed EUR 913.2 M.

The tranche was delayed after the Romanian government did not manage to put into effect some of the austerity measures demanded by the IMF as the country's Constitutional Court declared the intended 15% cut of retirement pensions unconstitutional.

This has led the Romanian Cabinet to resort to a shock raise of the value-added tax from 19% to 24% as of July 1, and to cut all budget sector salaries by 25%. It has also gone for a 25% tax on lottery sums, and a 16% tax on deposit interest income.

All measures of the Romanian government are intended to bring its budget deficit down to 6.8% in 2010, from 7.2% in 2009, which is a condition for getting IMF aid.

IMF's bailout loan for Romania was approved in May 2009, and it amounts to EUR 13.6 B.

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