Click here for an overview of the headline grabbing events in Romania this past week
The government makes positive adjustment to the budget following record economic growth
The government in Bucharest has this week approved its second budget adjustment this year. This is a positive adjustment and falls within the 3% budget deficit of the GDP imposed by European norms. As a result, the labour, interior, healthcare, justice, transport and education ministries will receive additional funds, while the ministries for small and medium-sized enterprises, culture, the environment, regional development, European funds and public finance will see their budgets slashed. The year’s second budget adjustment comes against the backdrop of good news from Eurostat and the National Institute for Statistics concerning Romania’s economic growth, which is very welcome for the government made up of the Social Democratic Party and the Alliance of Liberals and Democrats.
This is how Prime Minister Mihai Tudose received this piece of news: “It’s very good news for us and bad news for those who were hoping we would die in pain: an economic growth rate of 8.8% in the third quarter of the year compared with last year, which makes us optimistic the overall growth rate may push towards 6% in 2017. Not only did we not die, as some have been hoping, on the contrary, we have achieved an enviable 3rd-largest growth rate in the world.”
Some commentators are not, however, convinced this growth rate can be maintained. Aurelian Dochia is one of them: “It’s unlikely this growth pace can be maintained at this level and we may find in 2018 that some aspects that don’t seem to cause much concern now may do so later. One of the main worries in my opinion is the budget deficit. We must also take into account that indicators such as the interest rate have begun to go up fast, while the inflation rate is already even above the National Bank’s expectations. This puts some pressure on the exchange rate, which is worrying for many.”
For at least a week, the national currency, the leu, has been constantly depreciating against the euro to reach new lows every day.
The opposition seeks no-confidence vote against the government
The National Liberal Party is determined to bring down the government in Bucharest through a no-confidence vote. The last drop was a recent emergency order to amend the tax code that will see, among others, a switch in the payment of social security contributions from employers to employees and an income tax cut from 16% to 10%. Criticised by employer associations, trade unions and some sections of civil society, the government’s measures have also been challenged by the right-wing parliamentary opposition spearheaded by the Liberals. For their no-confidence motion to pass, the latter must persuade as many MPs from the ruling coalition as possible. So, apart from the usual talks with the other opposition parties, every Liberal MP has been trying to convince at least one MP from the ruling coalition to support the motion.
The leader of the Liberal deputies group, Raluca Turcan explains: “We did not approach the issue in the sense of replacing the Prime Minister and toppling the Government just for the sake of it. We talked about what would happen to Romania after the Government had left, because, if we want to put an end to unpredictability, a low purchasing power and the destabilization of Romanian institutions, this government must leave.”
The National Liberal Party has announced it will stage citizen information campaigns and meetings in Bucharest and across the country. The party has also called on the Ombudsman to challenge the fiscal reform promoted by the Romanian Government at the Constitutional Court.
The European Commission publishes a new CVM report
On Wednesday, the European Commission published a new report under the Cooperation and Verification Mechanism, assessing progress made by Romania in the field of the judiciary and the fight against corruption. The document reads that the global pace of reforms in Romania has been flat in 2017, and threats against the independence of the judiciary have become extremely worrying. On the other hand, progress has been made however with regard to public procurement and the verification of conflicts of interest. As the report does include positive conclusions, the Romanian Justice Minister Tudorel Toader believes that lifting the CVM next year is possible. However, the president of the country Klaus Iohannis disagrees.
Attending a European summit in Gothenburg, Sweden, he has termed as ‘inappropriate’ the optimism displayed by the governing coalition. The head of state believes that the CVM report is a serious alarm signal and has drawn attention to the fact that the efforts made to strengthen the reform of the judiciary and to fight corruption could be jeopardized by the actions of some politicians who refuse to accept that their duty is to serve the citizens of Romania, not party or group interests.
Romania purchases Patriot missile defence systems
On Monday, the bill on the purchase from the US of Patriot surface to air missile defence systems was submitted for parliament debate. The document provides for the purchase of 7 such systems, of which four will go to the Air Force and three to the Land Forces. The contract is worth 3.9 billion dollars.
The first system, which costs 764 million dollars, is to be purchased by the end of this year and, according to the Defence Minister Mihai Fifor, will become operational in 2019. The bill, which has been debated by the Government as well, stipulates that, to Romania, establishing a ground based air defence capability is essential, because it contributes to ensuring national and regional security and it helps strengthen the Strategic Partnership with the United States.