Child allowances to double

Constitutional Court of Romania rules child allowances are to double instead of increase gradually, as government proposes.

Daniela Budu, 25.09.2020, 13:50

The government is obliged to double child allowances for
around 4 million children following a ruling by the Constitutional Court which
rejected as unfounded the government’s argument against this move. The Court
ruled that a law passed by Parliament to reject a gradual increase in child
allowances as proposed by the government is constitutional. As a result, the
initial law will remain in force, a law that was proposed by the Social
Democratic Party in opposition in December last year and which provided for the
doubling of child allowances from 150 lei to 300 lei, which is about 60 euros,
and from 300 to 600 lei for children with disabilities. The measure was to be
applied last January, but the government argued the state budget could not sustain
it and adopted an emergency order to postpone it by August.

After hearing the Court’s ruling, prime minister
Ludovic Orban said doubling child allowances at this particular moment would
lead to an increase in the budget deficit and that they should be doubled instead
over five stages as proposed by the government. Ludovic Orban:

Doubling child allowances requires additional budget
funds of some 7 billion lei [around 1.44 billion euros], which would lead to an
increase in the budget deficit of 0.6%. We’ve been in this situation before. The
National Liberal Party will double child allowances, but will do so over five
stages, with the final stage on 1st July 2022. Increasing child
allowances is a priority for the National Liberal Party, but this increase must
take into account the economic situation and the budget resources available.

Liberal senator Alina Gorghiu says the government will
consider its options when the Constitutional Court publishes its justification.
The leader of the Social Democratic Party Marcel Ciolacu says, however, that
there are enough budget funds to double child allowances, while his fellow party
member and interim Senate speaker Robert Cazanciuc accused the government of
incompetence. The president of the Alliance of Liberals and Democrats Călin
Popescu-Tăriceanu said the government is obliged to double child allowances and
increase pensions by 40% and accused it of trying to prevent these measures
from coming into effect.

The latest Constitutional Court ruling comes after
Parliament this week moved to increase pensions by 40% instead of 14% as decided
by the government. According to the government’s estimates, the decision would
cost the budget an additional 2 to 3 billion euros this year and 12 to 14
billion euros next year. Romania’s public debt has already gone up considerably,
rising by some 15.4 billion euros in the first seven months of the year alone. (CM)