“I’ll begin by reminding you the plan proposed by the IMF, EU and World Bank during their mission in Bucharest, but I will firstly refer to the options presented by the Fund. If Mr. Strauss Khan has any doubts, I will personally send him the document that outlines the measures proposed by the IMF, which includes: the raise of the VAT from 19% to 24%, of the single tax from 16% to 20%, and public wage cuts of 20%”, said the president of Romania as a feedback to the IMF president’s statements last week.
Basescu explained that Romanian authorities have rejected IMF proposals because it would have led to a double-digit inflation rate and wouldn’t have cured the country’s budget crisis.
“A VAT hike from 19% to 24% would have pushed inflation rate to double-digit levels. The inflation would have been at least 10% this year, far above the 4.5% target. It would have also led to a switch of overhead expenses in the economic area. After talks with the Government and NBR, we have agreed to reject IMF propositions”, said the president.
Dominique Strauss-Khan said recently in an interview for France 2 that he had opposed the 25% public wage cut, suggesting a hike of tax on rich, an option that was ruled out by the Romanian government.
Basescu: IMF�s proposals wouldn�t have cured Romania�s budget crisis
President Traian Basescu said that the corrective actions proposed by the IMF mission in Romania hadn’t included only the VAT and single tax hike, but also a reduction in public wages, and that if Dominic Strauss-Khan, the president of the International Monetary Fund had any doubts in this regard, he could send him a copy of the document agreed between the Fund and Romania.
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