Romanian government has to be cautious and avoid sliding into populism, says president Basescu

Newsroom 10/08/2011 | 16:21

Traian Basescu presented in a public statement, yesterday evening, the main conclusions of the meeting with representatives of the financial sector. This meeting was attended by the Finance minister, Gheorghe Ialomitianu, National Bank governor, Mugur Isarescu, and the president of the Fiscal Council, Ionut Dumitru. The main topic of the discussion was the evolution of international financial markets with possible effects on the Romanian economy.

Basescu stated that Romania has to continue the restructuring and fiscal consolidation programs agreed with the IMF, EU and World Bank. Government expenses have to go down together with reduction of welfare expenditure. On the medium term, the issue of the pension deficit has to be addressed as it has currently widened to RON 14.8 billion. The president went on presenting additional deficits of EUR 500 million for the unemployment fund and EUR 2 billion for healthcare services. At this point, Romania has to borrow money from the financial markets at increasing interest rates in order to cover these deficits.

For the 2011 budget, Romania has allocated the largest share of GDP for investment projects and EU funded projects have also registered an increase, in comparison to previous years. Basescu went on saying that state-owned companies will need to improve their economic performance.

The Romanian government has to adhere to a cautious program, avoiding populist promises for increases in wages and pensions, as the economic environment is far from being solid, concluded the president.

Ovidiu Posirca

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