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Romania May Speed up Pension Hikes 



March 31, 2008 

Romania may speed up an increase in state pensions planned for next year, if there is a surplus on the social insurance budget, Finance and Economy Minister Varujan Vosganian said on Monday. Vosganian's centrist government decided last year to almost double state pensions between 2008 and 2009. The decision sparked concerns among economists that it would boost domestic demand and raise the threat of consumption destabilising the economy.

Vosganian also slammed critics, saying the economy was in good shape. "If the social insurance budget has a surplus it seems fair to me to give that surplus back to pensioners," Vosganian told a government briefing. "What should I do ... hide the money to avoid being accused of electoral charity?" "For how many months, when, how much money will be needed ... let us see to that because up until now we have done this duty very well. Trust us to continue to do as we promised when it comes to raising pensions."

Romania had planned a new pension rise on Jan. 1, 2009, but authorities say the hike might be operated one or two months earlier if the social insurance budget records a surplus in the last part of the year. The centrist minority government sped up by two months a pension hike planned for Jan. 1, 2008.

The Romanian economy has grown robustly in recent years, powered by foreign investment and domestic demand as the country raced to modernise. The spending spree has bloated the current account deficit and helped fan inflation, raising concerns about long-term stability of the economy in light of global financial woes.

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