Romania's Pension Cuts Ruled As Illegal

Now all these governmental emergency measures are getting really interesting;  first we have a judge overruling the US President‘s ban on deep sea drilling, and now we have a court overruling a governments austerity measures. What’s next? Will the EU Parliament rule the 750 billion euro bailout package as illegal according to the Maastricht Treaty?

“This will be a big blow to the government of Prime Minister Emil Boc.”

Nick Thorpe

A top court in Romania has ruled out a pension cut demanded by the country’s government as part of a deficit-cutting financial austerity measure, BBC reports.

The government wanted to cut state pensions by 15%, as well as slashing wages and welfare allowances.

But the Constitutional Court said the pension cut was unconstitutional, a ruling which cannot be appealed.

The decision was reached hours after dozens of Romanian citizens stormed the presidential palace to get an audience with President Traian Basescu.

Riot police repelled them from the palace.

The court did not publish its reasoning behind the ruling, but unions say pensions partly funded by worker contributions to are protected by the constitution.

Romania wants to cut spending to qualify for a $20bn loan from the International Monetary Fund.

That may now be delayed, and this will be a big blow to the government of Prime Minister Emil Boc, BBC’s Nick Thorpe reports.

The austerity plan negotiated by the government with the IMF aimed to cut the national deficit from 7.2% of output to 6.8%.

Ministers hoped to achieve that by cutting pensions by 15% and wages by 25%.

CDS Blow-up

CDS blew up today and closed +30 to 410 basis points for Dracula’s host country, and +20 to 360 bps for the country that served as the reverse engineering center of the former Communist Bloc – Bulgaria.

So now we wait until the Greeks starts involving their legal constitutions, and ask the logical question why their pensions are allowed to be cut by as much as 30%.

And for the EU parliament to finish its investigation of the process that led the the EU Commission‘s questionable decision to set up a 750 billion euro emergency fund.

Related by the Econotwist:

Romania: Largest Protests Since Ceausescu

Desperation Gets A Grip: Greece Puts Islands Up For Sale

Pressure On Spain To Cut More

Banks Protesters Storm Irish Parliament

E.U. Parliament To Investigate Euro Zone Bailout

Bundesbank Suspects A French Conspiracy

EU Officials Fears Second Depression And War

Why Optimists Are Wrong About The Euro Zone


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