Romanian regime teeters on brink

Published on Thursday 2 September 2010 17:12

Romania's unpopular government was in turmoil last night after the prime minister fired five ministers, with the economy supremo also saying he will quit.

Romania is mired in recession and the government has slashed public sector wages by a quarter and hiked sales tax from 19 to 24 per cent to reduce the deficit - measures requested by the International Monetary Fund.

The cutbacks are aimed at meeting conditions for a ?12 billion loan from the IMF, the European Union and the World Bank to bail out the country last year, when its economy contracted by 7.1 per cent. Some of the money was used to pay pensions and wages.

Prime minister Emil Boc fired the finance minister, labour minister, agriculture minister, transportation and communications minister. Economy minister Adriean Videanu has told Mr Boc he wants to quit to return to party business.

Finance minister Sebastian Vladescu criticised his sacking. Earlier this summer, he was chastised by Mr Boc for saying Romania would scrap the flat personal income tax in favour of a progressive tax system that hits top earners at a higher rate. Mr Vladescu had played a key role in IMF negotiations.

Several key members of the governing Democratic Liberal Party called for Mr Boc to resign. The government's popularity has plummeted due to the cuts, but also due to president Traian Basescu's alleged meddling.