BUCHAREST, Nov 19 (Reuters) - Romania's centrist government on Wednesday approved a set of measures aimed at simulating economic growth and boost job creation in the poor European Union member to limit the impact from the world crisis.
Since woes heightened in recent months, concern has grown that Romania is more vulnerable to an economic downturn than its peers because of a vast external gap, high rates of hard currency lending and inadequate wage and fiscal policies.
The upcoming Nov. 30 parliamentary election, which has prompted parties across the spectrum to make wages and pensions a key campaign issue, has also worsened investors' jitters about holding Romanian assets.
Underlining such concerns, ratings agencies Standard & Poor's and Fitch have cut Romania's status to below investment grade, citing concerns over inadequate economic policies, particularly budget spending.
"It is essential to further stimulate economic growth and investment to create new jobs and preserve the existing ones," Prime Minister Calin Tariceanu told reporters after a cabinet meeting.
"This are the goals we focused on and we cannot label them as fiscal relaxation moves," Tariceanu, whose party ranks third in opinion polls with 17-18 percent, added.
Tariceanu said the government approved exemption from the 16 percent flat tax for households' banking deposits and for companies' reinvested dividends.
Buyers of houses cheaper than 380,000 lei will also pay a 5 percent valued added tax instead of the current 19 percent, while social contributions will be slashed by 2 percentage points from 39.5 percent from June.
The cabinet also approved a 5 percent discount in income and profit tax for households and firms that pay dues in time and a 1,000 euro payment for every jobless person a company hires. (Reporting by Radu Marinas; Editing by Ron Askew)