BLOOMBERG/ After its highest court ruled proposed pension cuts and austerity measures unconstitutional -delaying a $1 billion IMF payment this month- the government said it would raise the value-added tax to 24% from 19 % to plug a budget hole and meet the IMF budget-deficit target. “I am profoundly disappointed that we had to raise the VAT today,” said Finance Minister
Sebastian Vladescu. “This is not the best solution we could have had. It’s not what we wanted.”
The court decision came down as dozens of protestors clashed with police outside the presidential palace over the 15% pension cuts. The ruling also spread fear among foreign investors that other nations' proposed austerity measures may be threatened. The currencies of Poland and Hungary slumped on the news.
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