The cut of the pensions and salaries comes from the fact that the IMF did not accept the rollover of debt, as practiced by the Romanian budget.

In the talks with the IMF (which took place last Wednesday - when no one, not even our team or the mission of the IMF, could know what new measures would be implemented, even though the mass-media presented the hike of the VAT and of the profit tax as certain) the defining moment occurred when the parties realized they could not agree on the size of the budget deficit; the Romanian side claimed that our budget would not exceed 6.9% at worst, whereas the IMF claimed that the deficit would reach 9.9% at best.

The answer comes from differing accounting procedures.

The Romanian side did not include in the deficit the interest on the loans it took out from commercial banks (government bonds) because they had rolled them over into the next year; once the maturities came this year, instead of paying off the loans and their interest, the government issued new bonds which covered the cumulated amounts it owed.

And this is how, they managed to slim down the budget deficit by roughly 3%, because they did not include the loan.

They only included the interest.

* The budget"s Ponzi scheme

At the end of 2008, Romania"s GDP was approximately RON 550 billion, and the budget deficit stood at 5.5% of the GDP, meaning 30.2 billion RON.

In 2009, the Ministry of Public Finance borrowed money from the domestic banks to finance its deficit, at an average interest rate of 14%.

In 2010, as they were not able to pay back the principal and the interest rates, they rolled them over in 2011, and borrowed money again at an average interest rate of 8%, for the same deficit as in 2008.

In total, for the deficit of 2008, at the end of 2010 we would be required to pay approximately 6.6 billion RON. @