World Bank finds Tariceanu-led administration faulty

The unfunded increase in pension benefits, cuts in the social security contribution rates, discretionary allocations to sub-national governments and other decisions of the outgoing government taken in 2008 have led to a deterioration of the balance of payments, reads a World Bank report released earlier today.

“The new government that came to power at the turn of the year has announced and approved a series of tightening measures that may at least partially offset the deterioration in the fiscal balance”, reads the report on the EU’s ten newest Member States.

Depending on macroeconomic developments, governments in the region may need to further adjust expenditures, “especially in countries which built their 2009 budgets on what appear now to be optimistic macroeconomic projections”, WB analysts say.

In 2009, wage pressures should continue to lessen across the region, although the extent will depend on local labor market rigidities.

The budget deficit was widened last year to record 5.2% of GDP and the new Government targets a 2%-of-GDP public deficit by yearend.

President of Romania, Traian Basescu notified the World Bank delegation during a meeting at Cotroceni Palace on the latest visit of IMF in Romania and thanked the representatives of WB for their call in Romania in the midst of difficult times.

The president said the state regulators will make a decision concerning the “reforms in Romania and economic crisis”.

The director of World Bank for Central Europe and Baltic States, Europe and Central Asia region, Orsalia Kalantzopoulos, head of the WB delegation, said she had already met the minister of Justice, Catalin Predoiu and the chairman of Senate, Mircea Geoana.

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