Romania Seeks Support for Steep Spending Cuts
2009-09-16 02:11
The Romanian government is calling for a vote of confidence in parliament. They need to win quick support for tough spending cuts required by the International Monetary Fund, in return for aid.
Aiming to slash public sector costs and streamline ineffective administration, the reforms should ease the financial burden on the state. It’ll also free up cash for investment in the long term.
But they have sparked social tensions in Romania, a member of the European Union. The country is plagued by a deep recession and rising unemployment.
Shortly before the parliament session began, the ruling leftists of the Social Democratic Party (PSD) pledged to stay in government, despite disagreements over the reform package.
Many commentators see the bills as a key test of the government's ability to agree on painful policies, and meet conditions for the 20 billion euro IMF package secured in March.
The reforms aim to undo years of runaway growth in the public sector, which employs a third of the Romanian workforce and offers some of the highest salaries in the economy.
Economists say bloated state finances are a crucial obstacle to effective development of the infrastructure and modernization. They say Romania lags behind many of its former Soviet bloc peers, since communism fell there in 1989.
But with powerful public sector trade unions, an important source of support for many politicians, particularly the PSD, reform efforts so far have been lackluster.
Hundreds of workers picketed parliament yesterday, protesting against pay freezes and thousands of planned redundancies.
Unions have also called a general strike for Oct. 5, expected to muster 800,000 public sector workers nationwide, including doctors and teachers.


