Foreign debt skyrockets to 86bn euros

The state’s desperate need for money caused a surge of the foreign debt by almost 6 billion euros in the first quarter, to 86 billion 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 in the share of long-term debt in the total, which comes with a lower interest.
The quick rise in debt, mainly taken on to pay salaries and pensions brings out the need to cut the state’s spending. Yet the Government’s commitment to the IMF to cut expenses by 2% of GDP could be delayed since the Social and Economic Council failed to deliver a clear ruling on the letter of intent to the IMF. Representatives of the employers’ association were unable to deliver a clear vote, with only the unions voting against.
It remains to be seen whether the Government endorses the letter as it is or further negotiates it with the unions and employers’ associations. The Social and Economic Council (CES) vote is for consultative purposes only, but President Traian Basescu said that if the vote was not favourable, the letter could be renegotiated.
Finance Minister Sebastian Vladescu says the document had better leave for Washington in one week, so that the Board could discuss it next month and Romania could get the fifth instalment of the loan worth about 800 million euros.