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| THE WEEK IN REVIEW 11-17/01/2010 |
| (2010-01-15) |
| Last updated: 2010-01-18 13:12 EET |
On Thursday, the Romanian Parliament passed without major changes the draft budget proposed by the ruling coalition government made up of the Liberal Democrats and the Democratic Union of Ethnic Hungarians, after four days of heated debates. After the vote, PM Emil Boc said that the present budget is a landmark in Romania’s emergence from the economic crisis, paving the way for economic recovery. He mentioned some of what he believed to be the strengths of the budget: the biggest percentage of the GDP so far to be allocated for investment, 6.4%; holding VAT at 19%; holding the income tax rate at 16%; and preserving the tax exempt status of re-invested profit. However, opposition leader Ludovic Orban belives that this is the worst budget in the last 20 years, and claimed that the standard of living for most Romanians will plummet. The main goals set by this law are: 1.3% economic growth, 5.9% deficit, 3.7% inflation, and 7.3% unemployment. Pensioners aren’t facing good prospects this year. The proposal to raise the minimum pension did not make it through Parliament, and pensions will be frozen in 2010. After passing the budget, Romania expects the IMF to release the next 2.3 billion Euros of the almost 13 billion Euro loan granted a while back, in spring. Of a total of 20 billion being borrowed from the IMF, EC, and the World Bank, Romania has so far received 6.9 billion.
Romanian Finance Minister Sebastian Vladescu announced that this year 100,000 state employees may lose their jobs, in an attempt to cut public spending. One of the worst affected areas will be education, where 15,000 positions will be removed in line with an executive order passed by the government last year. Next in line is public administration, with 17,000 jobs under the axe, the worst affected being workers in town halls, local councils, and social assistance offices. These will be joined by 6,500 employees from the state run national railways. Analysts believe that this downsizing will only worsen the employment situation. Unemployment now stands at 8%, double the figure of this time last year. Unions have already threatened protests.
The 40-year old Romanian Dacian Ciolos, nominated for the position of European Commissioner for Agriculture, was heard on Friday by the expert committee in the European Parliament. He said that his main priority would be to promote the redrawing of the Common Agricultural Policy of the Union after 2013, which he said should be robust and balanced. Ciolos also said that direct payments should provide a minimum of stability to farmers. Mr. Ciolos was Romanian Minister of Agriculture between October 2007 and December 2008, under Prime Minister Tariceanu. If endorsed on January 26th, Ciolos would become the youngest European Commissioner, as well as the first to hail from an Eastern European country.
This week, the number of deaths caused in Romania by the new flu virus reached the psychological threshold of 100, with 6,300 confirmed cases of infection. Meanwhile, the national vaccination campaign continues for those over 16, with the vaccination of children between 6 and 16 years of age scheduled for February. Controversies around the campaign continue, with both doctors and the population split over its effectiveness. After seeming to ignore the warnings from the authorities last autumn, now people are queuing up to get vaccines, and are storming pharmacies to get quick tests for the virus.
One piece of good news this week came from the National Bank of Romania. The national currency went up against the Euro to its best quotation in 8 months, 4.1 Leu to the Euro. Some analysts are attributing this to rising confidence in regional markets, generated by the US dollar losing ground against the Euro as worsening unemployment figures are coming out of America. Others believe that the Leu appreciated due to efforts by local bank branches, which brought good returns in Euro to their mother companies, in order to comply with orders from the National Bank on capitalization, and because foreign investors bet on the Leu going up in value. However, experts believe that any violation of the IMF agreement could bring the national currency down once more.
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