Romania seals deal with IMF to raise public wages

BUCHAREST Sun May 6, 2012 4:44am EDT

BUCHAREST (Reuters) - Romania has sealed an agreement with international lenders to restore public wages to their previous levels, a senior official said, as part of the government's efforts to ease an unpopular austerity program.

The International Monetary Fund (IMF) has said Romania has some space to ease austerity, which included a 25 percent cut in public sector salaries in 2010. Some have since been restored.

Romania's centre-right government collapsed in April when it lost a vote of confidence in parliament, underscoring public dissatisfaction with its austerity program. Parliament is likely to back a new leftist government on Monday.

"Practically, the accord (with the IMF) has been negotiated and concluded successfully," Florin Georgescu, the proposed finance minister, told reporters late on Saturday after meeting IMF officials.

Doubts over the new government's adherence to its 5 billion euro IMF deal sent the leu currency to a record low this week, though it has recovered some ground as the administration has reassured on its commitments.

Romania aims for a budget gap below 3 percent of gross domestic product this year.

Salaries will rise by an initial 8 percent from June and will then be brought back to their pre-austerity level, Georgescu said, which implies a total increase of about 15 percent from current levels.

(Reporting by Sam Cage; editing by Maria Golovnina)

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