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News 01 Feb 12

Romania Seeks IMF Approval for Rises

As elections loom, Romania's embattled ruling party plans to raise pensions and wages with a view to deflecting some of its current unpopularity with austerity-weary voters.

Marian Chiriac
Bucharest

Romania's centre-right Liberal Democratic Party has mandated Prime Minister Emil Boc to hold talks with the IMF on planned pension and public sector wages increases from April.

The hope is that the rises will ease raging public discontent with the government's tough austerity measures.

An IMF mission is currently in Bucharest for a two-week review of Romania’s 5 billion euro precautionary aid deal.

“The government may consider a rise in wages and pensions, depending on economic growth from the first quarter of this year,” leaders of Boc's PDL announced.

Most political observers say the main motive for the rises is to bolster the ruling party’s sagging popularity in 2012, a local and general election year.

“The measure alone has no economic basis without a cut in taxes, which is not possible at the moment,” economic analyst Liviu Voinea noted.

“It just aims to shift public anger towards the IMF if the public sector pay rises are not approved by the Fund,” he added.

Romania is dependent on a 20 billion euro rescue package from the IMF, the European Union and the World Bank. It obtained the loan in May 2009 in exchange for agreeing to push through austerity measures aimed at taming the country’s yawning deficit.

In July 2010 the government cut civil servants' wages by 25 per cent, while thousands of state jobs were axed and VAT was increased by 5 per cent to 24 per cent.

Protests over falling wages and the effects of the austerity measures started in Janary, with thousands of people taking to the streets across the country demanding the resignation of both the government and President Traian Basescu.

The protests are still continuing in reduced numbers as snow and chilly winds in recent days have deterred many Romanians from staying outdoors.

The anti-government protests have boosted support for country’s main opposition parties. A poll released on Monday suggested that the opposition Social-Liberal Union, comprising Social Democrats and the Liberals, would win 53.4 per cent of the vote in a general election, up from 48 per cent in a December poll.

On the other hand, Boc's Liberal Democratic Party would get only 15.8 per cent of the vote, down from 21 per cent last month, the survey showed.

Analysts say gimmicks are only to be expected in an election year. “Romania will face soon local elections followed by general elections at the end of the year," journalist Adrian Patrascu noted.

"So the ruling party is bound to try to do things to neutralize some of the leftist opposition’s current advantage in the polls,” he added.

Perhaps with an eye on undecided "swing" voters, Prime Minister Boc has kept himself busy in recent days, directly supervising measures to alleviate roads hit by blizzards.

He checked work on the Bucharest bypass late last night, served hot tea to some drivers who refused to leave their cars in the snow and took a helicopter to see what road areas near Bucharest needed more work.

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