Romania president cautious on pay rise deal with IMF

(BUCHAREST) - Romania's President Traian Basescu said Sunday he would oppose a deal with the IMF and the EU to raise public wages if it meant exceeding the public deficit target set for 2012.

Florin Georgescu, finance minister in the left-leaning government expected to win parliament's approval Monday, said an agreement had been reached with the International Monetary Fund on increasing the budget deficit in order to hike public wages.

Crisis-hit Romania had slashed wages in the public sector by 25 percent in 2010 and all political parties have pledged to restore them this spring.

But Basescu insisted the move should not jeopardise this year's public deficit target, set at 1.9 percent of gross domestic product.

"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," Basescu said during a meeting with a delegation of the IMF and the EU.

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

The IMF had said during its previous mission in Bucharest that it would only agree to a modest pay rise, in the range of three to five percent.