Differences on fiscal policies

Romanias president Klaus Iohannis on Thursday leveled some harsh criticism at the governments planned fiscal measures, asking it to drop them.

Bogdan Matei, 03.11.2017, 13:37

The president described the reforms in the government’s pipeline as leading to fiscal confusion and as complicating problems rather than solving them.

Klaus Iohannis: “I request the ruling coalition, the Social Democratic Party and the Alliance of Liberals and Democrats, to show responsibility and give up these fiscal policies that generate mistrust and uncertainty and do not help anyone in the end. As to the economic measures proposed, I recommend caution from policy makers and the government.”

The president also said that, according to estimates based on the figures made public, after the planned transfer of the payment of social security contributions from employers to employees, someone who earns the average salary will only earn 3 lei, which is the equivalent of around 70 cents.

The president also criticised the government’s public investment policies, which he said dropped to inadmissible levels, and the collection of budget funds, which has reached an all-time low of 25%. Also on Thursday, trade unions gave new indications that they may break their fragile truce with the government. CNSRL Fratia, one of the most powerful trade union confederations in Romania representing half a million employees from various sectors, has announced plans for a general strike.

Trade unions fear that transferring the payment of social security contributions from employers to employees may lead to lower salaries and job losses. Two other trade union associations, Cartel Alfa and the National Trade Union Bloc, earlier gave similar warnings. In response, prime minister Mihai Tudose and the leader of the Social Democratic Party Liviu Dragnea say they do not understand the opposition to these fiscal measures planned for next year, which they say will benefit both employees and employers. The prime minister says some trade unions are deliberately ignoring the arguments in favour of these measures.

Mihai Tudose: “We show them the figures and they tells they’re not accurate, that they have their own figures. Some trade unions tell us they simply don’t agree with the measures. We are trying to understand what’s behind this stubborn refusal to see reality, when no one will suffer in fact and this is a good measure from which everyone stands to gain.”

Neither do the employers associations appear to be convinced by the prime minister’s arguments. The American Chamber of Commerce in Romania has said that the measures planned by the government will slow down business and diminish investors’ confidence in the Romanian economy.