ECONOMY

In Brief

Romanian court backs state budget, wage laws Romania’s Constitutional Court ruled the 2011 state budget and two wage laws are legal, backing the cabinet in pushing forward with key conditions for the next disbursements under the country’s international bailout plan. The nine judges of the court said the state budget, which seeks to reduce the deficit to 4.4 percent of gross domestic product from a goal of 6.8 percent this year, is constitutional, rejecting a challenge by the opposition, said Augustin Zegrean, president of the Bucharest-based court, in a phone interview. The court also said wage bills, which raise public salaries 15 percent in 2011 and tie future increases to professional performance and experience, are legal. Romania, which is going through the second-deepest recession in the European Union after Greece, has been trying to pass the 2011 budget and a package of wage bills to curb public spending, narrow the budget deficit and satisfy its international lenders. The country stands to receive 2.4 billion euros ($3.2 billion) in payments through March from a 20-billion-euro bailout provided by the International Monetary Fund, the European Union and the World Bank if it passes the austerity measures. The Liberal and the Social Democratic parties have been trying to topple Prime Minister Emil Boc’s cabinet since it cut public sector wages 25 percent and increased a value-added tax to 24 percent. Boc has survived four no-confidence votes since June, two of them last week over the wage bills. (Bloomberg) Serbia to rein in spending, could get rating upgrade Serbia’s efforts to rein in public spending may win the country its first-ever credit rating upgrade and attract bond investors, its finance minister said. A chance for lower borrowing costs that would follow from a higher debt rating will require the state deficit to remain at 4.1 percent of gross domestic product next year, Diana Dragutinovic said in an interview. The government will also have to borrow selectively as investors «increasingly focus on fiscal policy.» «If there are no developments that could lead to a deteriorating fiscal position and if we quickly manage to bring inflation back on track, that will be sufficient to have our credit rating upgraded in 2011,» Dragutinovic said. Serbia is rated BB- by Standard & Poor’s and Fitch, with a stable outlook, and is not rated by Moody’s. Croatia and Hungary had their credit ratings downgraded last week to a step above junk. S&P cited Croatia’s deteriorated fiscal position and weak external financing for the downgrade, while Fitch downgraded Hungary on fiscal policy concerns. Serbia’s economy will grow between 1.5 and 2 percent this year after a contraction of 3 percent in 2009, the minister said. With national elections approaching in 2012, Dragutinovic’s ministry will restructure the tax administration to better control tax collection, especially from large public companies, she said. (Bloomberg) Polish cuts Poland’s infrastructure minister says budget cuts will delay the construction of new roads, some of which were planned for the Euro 2012 soccer championship. Cezary Grabarczyk said Monday that some projects will be put off beyond 2013 because financing in the next two years has been reduced to 78 billion zlotys ($26 billion), down from the initially planned 94 billion zlotys. The cuts are meant to keep Poland’s rising budget deficit in check. It is expected to exceed 40 billion zlotys next year. Poland, a European Union member since 2004, has a poor highway network and is planning to improve it ahead of the Euro 2012 event, which it will co-host with Ukraine. (AP) Croatian reshuffle Croatian Prime Minister Jadranka Kosor has fired four of her ministers a year before new elections, saying the reshuffle should get the country out of an economic downturn and allow it to complete its European Union bid. Kosor on Monday replaced the ministers of finance, defense, construction and culture and introduced a new deputy prime minister in charge of investments. Parliament will have to confirm Kosor’s appointments. It is expected to vote today. (AP)