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Romania president cautious on deficit hike

Romania's president said Sunday he backed a deal with the country's lenders IMF and the EU that allows public servants' wages to be restored but warned that its deficit has to be kept under control.

"I fully back the restoration of wages to their previous level," Traian Basescu told a press conference after meeting a delegation of the International Monetary Fund and the European Union.

At the same time, he stressed that it was crucial to keep the public deficit under control.

"This is a key issue. If this principle is not observed I will not send the letter (of intent signed with the IMF) to parliament," he said.

Crisis-hit Romania was forced to turn to the IMF and the EU for a bailout in 2009, and agreed in turn to implement austerity measures to clean up its public finances, including slashing wages in the public sector by 25 percent in 2010.

But an agreement has been reached this weekend with its lenders allowing Bucharest to increase its budget deficit so that public wages can be restored to their pre-2010 levels.

In addition, the deal allows for pensioners to be reimbursed for social security contributions that they had been unduly asked to pay since 2011.

On Sunday, Basescu signaled that he had reservations about where funds could be found to reimburse pensioners.

"We must find a solution regarding the sums we must pay back to pensioners so as not to increase the social security and pension funds deficit," he stressed.

Basescu, who advocated austerity measures, has repeatedly stressed Romania should continue to keep a tight lid on public spending.

Romania had obtained a 20-billion-euro rescue package from the IMF, the EU and the World Bank in 2009, which helped it emerge from recession.

In March 2011, the IMF and the EU agreed to provide the Balkan country with a fresh credit line of five billion euros ($6.8 billion dollars) to be drawn only in case of emergency.

mr/hmn

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