THE WEEK IN REVIEW

26-30 August, 2024

Eugen Coroianu, 31.08.2024, 13:00

Elections upon elections!

The Romanian government adopted the calendar for this year’s presidential elections. The first round will take place on November 24, and the second will be on December 8. Last week, the executive also decided the calendar of the legislative elections, scheduled to take place on December 1, the National Day. This year, European parliamentary and local elections also took place in June. The PSD and PNL candidates, Marcel Ciolacu and Nicolae Ciucă, would enter the second round of the presidential elections, if the voting were held on Sunday – according to a CURS survey carried out between August 6-22. Regarding the parliamentary elections, PSD would lead in the preferences of the electorate, followed by its governing partner, PNL. The current PSD-PNL coalition can work in the future as well, believes Romanian Prime Minister Marcel Ciolacu, the leader of the Social Democrats. He believes that the future government could be inaugurated before Christmas, on December 23. According to him, despite the acid statements coming from both sides on the background of the launch of the candidacies for the presidential election, the Bucharest executive will work in the current formula until the general elections. The prime minister also said that, in the future, PSD sees no other coalition in power than that with the National Liberal Party. The president of the Liberals, Nicolae Ciucă, also pleaded for the continuation of the government, regardless of what happens in the coalition.

Pension chaos

The week was notable in Romania for the chaos created by the new law on indexation of state pensions. Through this, the rulers aimed to correct certain discrepancies in the system, but the result displeased hundreds of thousands of people. Even though a large part of pensions have increased, many have received recalculation decisions where the income is lower or even much lower than what they were receiving until now. In addition, some categories of pensioners say that after the recalculation they will no longer benefit from periodical indexation for many years from now. They are also afraid that these decisions that reduce their pensions could be applied in the future, although both the prime minister and the relevant minister have given multiple assurances that, regardless of the result of the recalculation on paper, no pension will decrease. People also report many miscalculations. In any case, the so-called “special pensions” of certain categories of employees, much larger and not based on contributions, were not affected in any way. In order to calm the tensions, the pension taxation threshold will increase, from October 1, from the current 2,000 lei (400 euros) to 3,000 lei (600 euros), as announced by the minister of labor, Simona Bucura-Oprescu. Whether or not the pension chaos will influence the upcoming election remains to be seen.

Budget deficit above expectations

Romania’s budget deficit exceeded, after the first 7 months of this year, the threshold of 4% of the Gross Domestic Product, according to data from the Ministry of Finance. The analysis of the budget execution shows that the State had, in the January-July period, total revenues of over 331 billion lei (the equivalent of over 66 billion euros), an increase of over 15 percent compared to the first 7 months of 2023. The expenses, however, increased by over 23%, reaching more than 402 billion lei (over 80 billion euros). We remind you that the budget for this year is built on a deficit of 5 percent of GDP. On the other hand, the Minister of Investments and European Projects, Adrian Câciu, announced that Romania has so far collected funds from the Cohesion Policy worth almost 24 billion euros in the 2014-2020 financial year, and has reached a level of absorption of over 99%.

Heatwave and drought

Romanian farmers whose crops were destroyed by the drought will receive compensation from the government. The measures, which will be adopted next week, aim to grant funds for this summer’s damage, but also a mechanism to insure autumn and spring crops. The Minister of Agriculture, Florin Barbu, specified that up to 3,000 lei per hectare (about 600 euros) will be granted, something that will lead to the unlocking of credit for farmers, according to discussions with bank representatives. The necessary funds will be provided from the national contribution, to which is added 17 million euros from the risk fund of the European Union. Also, the State aid scheme called “Farmer’s Credit” will be supplemented with 400 million lei (approximately 80 million euros). Soil drought has settled in Romania in several areas after an extremely hot and dry summer.

Two pieces of good news

Romania officially received the approval in the field of competition within the process of joining the Organization for Economic Cooperation and Development. According to a press release from the Competition Council, the opinion was issued after the completion of the evaluation process of the activity carried out in the period 2018-2022. During the analysis, the Council had to demonstrate that the way it acts meets the requirements of the international organization. Recommendations were also made, and the status of their implementation will be presented in a year’s time. Joining the OECD is a priority for Romania, being considered the third major strategic objective after joining NATO and the European Union. On the other hand, the administration inWashington would announce, on October 15, a decision regarding the lifting of visas for Romanians, which would apply starting from 2025, stated government sources from Bucharest.