What the newspapers say: December 30, 2009

Boc Cabinet cuts red tape of a motorway made with borrowed money. Elsewhere in the news, 2010 will be the year of price increases in Romania. Last but not least, The Romanian Government starts state jobs redundancies with Education.

Boc Cabinet cuts red tape of a motorway made with borrowed money, Gandul reads. In 2010, Romania will have to pay interest rates worth of 2.5 billion euros, more than the entire Transport Minister budget. The Executive will tackle the crisis the same way it did last year: by borrowing money to cover the difference between low budget incomes and budget spending. The latter is similar to the 2008 value, when Romania went through a record economic growth.

Romanian public debt exploded in 2009 by 14 billion euros, counting around 40 bln euros at the moment, the newspaper goes on. In the first 2010 quarter, the Finance Ministry will announce the borrowing of 2.8 billion euros from banks, namely 32 million euros a day (including weekends and legal holidays). The minimum credit taken from banks will be 12.5 billion euros, out of which 6 billions will be used to extend older credits (this will not add up to he public debt), the publication estimates.

Four billion euros will be spent on the budget deficit, at least 2.5 billion euros will be used to pay up interest rates and two billions will go to the Transport Ministry’s budget. The biggest problem will be finding banks available to loan money to the Romanian state. Analysts say that many important banks activating in Romania have reached the maximum lending sum in their relationship with the Romanian state.

2010 will be the year of price increases, Adevarul informs. The taxes target not only vices, but also some basic food and bakery products. The beginning of the year brings an average 15% increase in duties and taxes. In 2010, these will be calculated with the euro exchange rate from October 1 2009 as reference, namely 4.2 lei.

Cigarettes will see the tax go up from 64 to 74 euros for 1,000 cigarettes, so one pack will cost around 100 lei. Alcohol will sell at a 6-8% higher price. Car fuels will be 5% more expensive, which will trigger a chain reaction. Natural gases will not cost more, but electricity will to match inflation. The government will stop paying the state subvention for chicken meat, which will make it 15-20% more expensive. Pork will cost 5-7% more: 70% is imported and the price is influenced by the currency exchange rate.

Producers still have sufficient stocks, so the increase in prices will generally come into effect in February next year. Imported raw materials will be influenced by the leu devaluation and the exchange rate. A very possible increase in the price of wheat will eventually lead to a more expensive bread and bakery products. Fruit and vegetables brought from overseas are to sell for more. Currently, 80-85% of the fruit sold in Romania is imported. Diary products will be affected by the change as well: the prices will go up 3 to 8%.

This comes in a moment when companies lay off people heavily. Romania’s matching the European Union prices entails increasing yearly the tax for cigarettes and car fuels. The latter will sell up to 7% more. Diesel is very much used in agriculture and goods transports. The Romanian Finance chief said Romania will request Brussels to approve an adjournment for the price increases, but nothing happened so far.

The Romanian Government starts state jobs redundancies with Education, the Romanian press read. The maximum number for state pre-university education roles was reduced by 10% for the year to come, in comparison with 2004. This means 33,000 jobs will be axed, according to Romania Libera. The total number of state supported jobs in this department is 306,000. The slash will happen throughout the entire year.

Education unions accused the Government of abuse, announced that they will contest the Government’s emergency ordinance in court and threatened to go on a general strike because the Executive did not discussed the normative act in any social dialogue, in the Economic or Social Councils or with the unions themselves. A Government spokesperson said that qualified staff will not be affected.