The new wage increases in the public sector, which were recently adopted by Romania’s Parliament, will boost Romania’s budget deficit to about 3.5% of the GDP next year, well above the recommendation of the International Monetary Fund, namely 2% of the GDP, said Alejandro Hajdenberg, the IMF resident representative for Romania and Bulgaria.

Following its mission in Romania in March, the IMF estimated that the budget deficit would exceed 3% of the GDP in 2017. Given the new wage increases, the GDP could grow to 3.5% of the GDP next year, Hajdenberg explained, reports local Agerpres.

“First of all, Romania needs to stay within the limits imposed by the European Union, namely 3% of the GDP. If this level is exceeded, (the country) enters the excessive deficit procedure, and Romania’s reputation will be affected,” the IMF representative added.

The recently adopted law increases wages for the education, healthcare, and social assistance personnel. Pension increases have also been adopted.

Romanian PM: Govt. will challenge law increasing salaries in public sector

editor@romania-insider.com