UPDATE 1-Romania to hike VAT to 24 pct, IMF to meet June 30

BUCHAREST, June 26 (Reuters) - Romania's centrist coalition government will hike value added tax by 5 percentage points to 24 percent as of July 1, which should unlock a 20 billion euros IMF-led aid package, Prime Minister Emil Boc said on Saturday.

The VAT hike comes one day after Romania's top court ruled against key planned pension cuts, prompting the International Monetary Fund to postpone a June 28 meeting to discuss the country's aid package.

While the higher tax should help Romania meet its IMF-agreed fiscal deficit of 6.8 percent of GDP, analysts said inflation will jump significantly and recession might deepen.

'The government has decided to hike the VAT by 5 percentage points,' Boc told reporters after an emergency cabinet meeting.

'Under these conditions, our agreement with the IMF goes on and our objective is ... to get a positive result when the (IMF) Board meets on Wednesday.'

The disbursement of about 2 billion euros ($2.68 billion) in IMF and European Union funds depended on the Constitutional Court's approval of a government move to cut state wages by a quarter and reduce pensions by 15 percent.

The Friday court ruling against planned pension cuts sent the leu currency falling as much as 1.1 percent to a seven-month low against the euro and hit share prices, while yields on its sovereign Eurobonds jumped.

In addition to the VAT hike, Boc said the government will also press on with its plans to cut public sector wages by 25 percent. While the court did not object to the wage cuts, they were included in the same bill as the pension cuts, which will now be sent back to parliament for further discussion.

Finance Minister Sebastian Vladescu said the VAT hike will will bring up to 4 billion lei ($1.16 billion) in additional revenue to the budget by the end 0f 2010.

'I cannot hide that I am deeply disappointed that today we are hiking the VAT,' Vladescu told reporters.

'We are taking this measure because it is important to ensure our financing ability. But we believe this (the hike) is not what is best for the Romanian economy.'

Analysts said investors were more wary than ever over the government's ability to enforce steps needed to keep its IMF deal going.

'Markets will not calm down until the IMF clearly announces what it plans to do related to Romania,' said Nicolaie Alexandru-Chidesciuc, ING Bank chief economist in Bucharest.

(Reporting by Luiza Ilie; Editing by Ron Askew) ($1=3.437 Lei) Keywords: ROMANIA TAX/HIKE ([e-mail] ; [phone]; Reuters Messaging: [e-mail] ) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.