Harshest cost adjustment steps in 20 years: 25% salary and 15% pension cuts

The Government last night approved the content of the letter of intent to be sent to the International Monetary Fund that contains the steps to be taken to ensure continuation of the agreement signed with the IMF.

We are seeing now the harshest cost adjustment of the last twenty years - the cut by 25% of the public sector employee salaries and by 15% of the pensions, as well as of other expenses such as children's allowance or subsidies for mothers.

The measure confirms the failure of the Government, which has been incapable to cut spending and boost revenues for over a year now. The only solution it was left with was to brutally adjust spending.

Premier Emil Boc yesterday said the measures would be valid until the end of the year, but would depend on the success of this expense-cutting plan.

The Government is also preparing a modification of the Fiscal Code. As a result, luncheon vouchers, holiday and gift vouchers will be subject to taxation, while multiple properties and capital market gains will be subject to a higher tax.