Romanian cuts spark union backlash

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Romanian cuts spark union backlash

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Angry unions in Romania have protested against spending cuts, accusing the government of making the man in the street pay for their lax running of the economy.

They oppose slashing state pensions by 15 per cent and reducing public sector pay by 25 per cent.

But others say the measures are necessary to keep worried bond investors onside.

Romania’s former finance minister, Daniel Daianu, warned that “financial markets do not watch only the size of public debts.”

“They judge the ability of a government to reduce over time the public debt deficit,” Daianu said in an interview.

“According to the numbers we have this year, unless correction is made, the budget deficit will go up to over 9 per cent,” he added.

Romania agreed a 20-billion-euro rescue package with the IMF, the EU and the World Bank last year to stimulate its struggling economy.

Under the deal, Bucharest must make deep spending cuts to qualify for further installments of aid — unions vow to oppose them through a wave of general strikes.

Romania’s public deficit stood at 7.2 per cent of GDP last year. Its target for 2011 is 4.4 per cent.