Boc: Tax hikes would have been a disaster

Prime Minister Emil Boc last evening painted a bleak picture of a Romania that had hiked taxes instead of cutting public spending by around two billion euros by the end of the year.

The Premier last evening pledged the Government's responsibility for the austerity laws, which provide for a 25% wage cut and a 15% pension cut for the months left until the end of the year.

PSD (Social Democratic Party) responded by introducing a motion of censure that will be supported by PNL (National Liberal Party).

In his responsibility assumption speech, the head of the Cabinet said if tax hikes had been chosen over pension and wage cuts, 50,000 economic operators would have been forced to shut down in the second half of 2010 alone, inflation would have been close to 10%, and foreign direct investments would have plummeted.

If the austerity measures are not implemented, the IMF arrangement will fall apart, and Romania will default because it will not be able to secure funding either from foreign or domestic markets.