ECONOMY

Romanian pensions argument

BUCHAREST (Reuters) – Romania’s deputy finance and economy minister has denounced plans by the powerful opposition Social Democrat Party (PSD) to reject next year’s budget law unless more cash is given to pensioners. The Democrats have said they will not clear the budget law for 2008 unless the government allots funds for two PSD laws that aim to secure extra funds for pensioners in addition to existing provisions to nearly double state pensions over two years. «It would be good if PSD rejected the 2008 budget and thus annuls the stupid laws they issued,» yesterday’s edition of the daily Ziarul Financiar quoted Deputy Finance and Economy Minister Sebastian Vladescu as saying on Sunday. Parliament has already cleared a law this year that nearly doubles state pensions over the next two years at an estimated cost of 14.3 billion lei ($6.3 billion), compared with this year’s consolidated budget deficit of roughly 10 billion lei. The PSD had threatened to topple Liberal Prime Minister Calin Tariceanu’s minority government if pensions were not raised. Both parties are under pressure to boost their falling popularity ratings. The government has said the new European Union member state can afford the hike, betting on robust economic growth and rising employment, but analysts say the pension measures risk stoking inflation and boosting Romania’s double-digit external deficit.