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| CRISIS AND AUSTERITY 07/05/2010 |
| (2010-05-07) |
| Last updated: 2010-05-10 13:57 EET |
This time, it is a tough austerity plan which, analysts agree, will wreak havoc among Romanians. Prime minister Emil Boc, who has become increasingly unpopular, is now cornered, so it was president Traian Basescu who announced the set of measures aimed at keeping the economy afloat.
"First of all, we will reduce the salary fund in the entire budget sector in the country. This measure must come into force as of June 1st. A 15% pension cut is also envisaged. Subsidies will be massively reduced, and money that is recovered from subsidies will be directly allocated to those in real need of financial support. The unemployment benefit will also be slashed by 15%.’’
The measures were agreed on with the IMF, the EU and the World Bank with which last year, Romania concluded a stand by accord worth almost 20 billion euros. Basescu labelled the measures as quote ‘’a way of showing confidence in the economy’s resuscitation’’ unquote. The alternative, which, until Wednesday, had caused quite a stir, was the increase of taxation, by dropping the 16% flat tax and the increase of the VAT from 19% to 25%. Employers’ associations claimed that the measures would have definitively choked the private sector, which has already operated massive redundancies and company shutdowns. As expected, political parties have reacted to the president’s announcement, according to the place they fill in the ruling coalition or the opposition. Pro-presidential liberal-democrats claim that the measures could not have been postponed any longer and that the good news is they will not hurt the private sector, which Romania’s recovery hinges on. But the political left wing views the salary, pension and subsidy cuts as ‘’a social genocide’’ and says they are unacceptable. Here is Social Democrat leader Victor Ponta:
"The fair solution would have been to put an end to budget expenses made to the benefit of the ruling party’s companies, different reductions depending on the category, and the sacking of thousands of cronies, who have been Liberal Democratic Party employees since October 2009.’’
Liberals also warn that the entire population will be affected by those measures, as there are not families of exclusively public sector employees or families working exclusively in the private sector. That will inevitably trigger the contraction of consumption that will directly affect private companies. The media has reacted in different ways. Daily paper Romania Libera says that, through its budget-eating apparatus, that gains weight every year‘’The state is the enemy’’ and concludes that quote ‘’seven million Romanians will pay the price of the administrative reform being rejected for 20 years.’’ End of quote. Daily paper Gandul, in turn, says that this is a state that over the last years has been ruled by cabinets appointed by Basescu and rebukes the latter for not opening the sacrifice campaign with the prime minister’s head.
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