No confidence vote looms as reforms bite
Overview:
As one of the countries that indulged most in a credit driven boom Romania is now suffering the harsh effects of a severe economic downturn. The authorities turned to the IMF for assistance and have, with a few delays, managed to implement the agreed economic program reasonably well so far. However, this economic program is forcing the government to face a key structural economic weakness that has persisted throughout the Romanian transition to date: a huge and inefficient public sector. Steps to reduce public sector employment and wages to free up resources for much needed investment are economically justified but politically explosive. The government faces a vote of no confidence next week as public sector workers strike against the implementation of harsh budget cuts.