First fiscal package passes Parliament

The Parliament in Bucharest rejected the motion of no-confidence tabled by the opposition after the Government assumed responsibility for the latest fiscal and budgetary measures

Leyla Cheamil, 15.07.2025, 14:00

In an extraordinary session on Monday, the Romanian Parliament rejected the motion of no-confidence filed by the populist and ultra-nationalist opposition against the PSD-PNL-USR-UDMR coalition government. The motion was initiated by the Alliance for the Union of Romanians (AUR) and also signed by MPs from S.O.S. Romania, POT, and independents. AUR initiated this move after the government led by Liberal Ilie Bolojan took responsibility for the first package of fiscal measures aimed at reducing the budget deficit, given that the country has the largest deficit in the European Union – 9.3% of the Gross Domestic Product. The initiators wanted to block the tax increases provided for in the fiscal package, which, in their opinion, only bring austerity to ordinary people. With the rejection of the motion, the fiscal package is considered adopted and sent for promulgation.

During the general debates on the motion of no-confidence, the AUR leader, George Simion, criticized the large number of deputy prime ministers and the austerity measures proposed only for low-income populations. The most important measures included in the fiscal package include an increase in VAT, the elimination of the exemption from health insurance contributions for pensioners whose monthly income exceeds 3,000 lei (600 euros), and an increase in excise duties on tobacco, alcohol, and fuel. In addition, salaries and pensions in the public sector will remain capped next year.

The proposed fiscal package is necessary to overcome a crisis situation, Prime Minister Ilie Bolojan said. He stressed that some criticisms were unfounded and called for fair alternatives to the proposed measures. The prime minister has added that Romania is beginning to regain trust on international markets and that the country’s borrowing costs have started to fall. Ilie Bolojan has also stated that he will continue the process of bringing order to the finances, stopping the waste of public money, restoring fairness, and making state institutions accountable.

One of the most criticized measures is the VAT increase. The head of state, Nicușor Dan, who had promised during the election campaign that it would not be increased, maintained his opinion that it could have been avoided by the government. However, this would have required a complex set of other fiscal provisions and in-depth discussions with the European Commission and rating agencies, says the head of state, and the executive was under time pressure and forced to approve measures that would immediately bring money into the budget to avoid the country’s downgrading. The president also believes that all these financial restrictions are temporary and that, with Romania’s accession to the OECD at the end of next year, the country’s financial situation will be much better.

The fiscal and budgetary measures for which the government has assumed responsibility in Parliament have sparked discontent among trade unions, which have taken to the streets to protest. Trade unionists say that the economic and social policies currently being promoted by the political class are an attack on employees, pensioners, and the most vulnerable citizens. (MI)