Cutting jobs without any logic is no anti-crisis solution, argues PSD chief Geoana

Chief of the Social Democratic Party (PSD), in the ruling coalition, Mircea Geoana on Thursday met officials of the International Monetary Fund and the European Commission, at the PSD main offices in Bucharest, and underscored that hasty job cuts in the public sector without any coherent reform plan for the administration is no solution to get Romania out of the crisis, PSD informs in a press release.

‘Brutal and illogical lay-offs are no solution. I am worried about what is happening to people and I am not saying this as a mere Social Democrat,’ the release quotes Geoana as saying.

The release quotes chief of the IMF delegation Jeffrey Franks as saying the IMF does not want to impose specific requirements on Romania, such as the lay-off of 20 percent of the public employees.

‘One of the main objectives of the IMF programme with Romania is trimming down the deficit, which does not necessarily means cutting jobs. Franks pointed out that in the first half of the year huge spending was conducted that should be kept in check,’ says the release.

Solutions are various. Less pay increases and diminishing spending is a simple yet painful solution to cut the deficit, but because IMF has learned from its mistakes in Asia of 10-12 years ago, it will now try to be more flexible, Franks is also quoted as saying.

‘If all we do is only cutting jobs without taking into account real economy, we risk generating a boomerang effect and worsen the deficient operation of the state institutions. Spending has to be reduced because there is currently a huge hemorrhage of public resources and spending on political grounds,’ Geoana told the IMF and European Commission officials.

He also requested the officials to accept a reduction in public spending at the same time with measures to boost the economy, such as exempting reinvested profit from taxation and increasing transparency in Value-Added Tax (VAT) refunds.

‘Franks also mentioned he will ask the IMF board in Washington to allow him more flexibility in such cases, on condition that the government deficit is kept in check.

He also appreciated PSD for its constructive role within the ruling coalition and during the negotiations with the IMF.

He also mentioned that the IMF’s intention is to grants assistance to Romania so that the country may solve short-term issues and also lay the foundations for an economic recovery in the medium and long run,’ reads the PSD release.

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