The state's desperate need for money caused a surge of theforeign debt by almost 6 billion euros in the first quarter, to 86billion euros. Romania has paid 8.6 billion euros on this debt, 23%less than in the same time of 2009, as a result of the increase inthe share of long-term debt in the total, which comes with a lowerinterest.
The quick rise in debt, mainly taken on to pay salaries andpensions brings out the need to cut the state's spending. Yet theGovernment's commitment to the IMF to cut expenses by 2% of GDPcould be delayed since the Social and Economic Council failed todeliver a clear ruling on the letter of intent to the IMF.Representatives of the employers' association were unable todeliver a clear vote, with only the unions voting against.
It remains to be seen whether the Government endorses the letter asit is or further negotiates it with the unions and employers'associations. The Social and Economic Council (CES) vote is forconsultative purposes only, but President Traian Basescu said thatif the vote was not favourable, the letter could berenegotiated.
Finance Minister Sebastian Vladescu says the document had betterleave for Washington in one week, so that the Board could discussit next month and Romania could get the fifth instalment of theloan worth about 800 million euros.
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