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October 6, 2009

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Pay cuts prompt Romanians to strike

HUNDREDS of thousands of Romanian public sector workers went on strike yesterday in protest at IMF-mandated pay cuts, raising pressure on the minority government before a November presidential election.

Hospitals dealt only with emergencies while teachers supervised children without conducting lessons in Romania's most wide-ranging protest since the fall of communism in 1989.

Police and prison guards also joined the one-day protest which affected 800,000 public sector workers, trade unions said. Transport was unaffected.

The strike underscored the difficulty facing the ruling centrists in pushing through fiscal reforms, demanded by the International Monetary Fund in return for anti-crisis aid. The presidential election is on November 22.

Last week, tensions over how to deal with recession and political manoeuvring ahead of the election drove the Social Democrat Party to quit the ruling coalition, leaving centrist Prime Minister Emil Boc to head a minority cabinet.

Despite the split, the PSD last week pledged to support government efforts to meet conditions for the IMF's anti-crisis aid package of US$29.23 billion.

But it said it plans to team up with the liberal opposition to try to bring down Boc's cabinet in a no-confidence vote which may be filed in parliament later this week.

"This kind of strike, engulfing the whole country, creates additional pressure on a government that is already very fragile," said political commentator Cristian Patrasconiu.

"The danger is that if the PSD will play the populism card, we will be seeing very high pressure on reforms."

Since the coalition split, economists warned IMF reforms may be at risk, plunging the leu currency and raising concerns over Romania's recovery prospects.

Both Fitch Ratings and Moody's Investor Service said Romania's credit ratings could come under downward pressure if the problems threaten economic policies or delay fiscal reforms.


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