IMF mission in Romania to review budget action: IMF official

(BUCHAREST) - An International Monetary Fund team started talks with Romanian authorities on Monday to review drastic action to cut back public overspending.

Romania has planned corrections to control public finances which are among the most severe anywhere in Europe.

"We'll go over what's happening in the fiscal sector, the financial sector..." the head of the mission Jeffrey Franks told reporters before a meeting with central bank officials.

Finance minister Sebastian Vladescu said he was confident a new instalment of help from the IMF and European Union would be disbursed soon.

The mission comes four weeks after a draconian austerity plan including a 25-percent slash in public-sector wages became effective.

The government had also planned cutting pensions by 15 percent, but a court ruled the measure "anti-constitutional", forcing authorities to raise the VAT tax on goods and services instead.

Franks said there were "both advantages and disadvantages" in any mix of policies chosen by the government.

"The question is: will these measures be able to regenerate confidence in the Romanian economy," he added.

This cost-cutting plan should help authorities bring down the public deficit to 6.8 percent of GDP from 7.2 percent in 2009.

Mired in recession, Romania last year obtained a rescue package from the IMF, the European Union and the World Bank worth 20 billion euros (26.0 billion dollars).

In a press release earlier this month, the IMF said the sixth disbursement of its loan, worth 900 million euros, could become available as soon as the executive board completed the review of the reforms.