Internal Affairs

Following the presidential elections on November 24th, which Klaus Iohannis won with 66,09% of the vote, Viorica Dăncilă called for an Executive Committee meeting for Tuesday, November 26th, 2019. Following mounting pressure to reform the party, Viorica Dăncilă resigned from her position as president of PSD and Marcel Ciolacu was designated as interim president until a National Congress can be organized in February 2020. Paul Stănescu was named secretary of the party, replacing Mihai Fifor. According to Dacian Cioloș, those who voted for Dan Barna in the first round of elections had a crucial role in delivering this result.

Nicolae Bădălău insisted on November 22nd that a no-confidence vote will be started by PSD in February.

On November 25th, 2019, Victor Ponta announced a Pro Romania convention for February 8th, 2020, during which their political manifesto for 2020-2024 will be presented. He also offered to collaborate with PSD for ”meaningful opposition” and reform. Pro Romania MEP, Mihai Tudose stated that Victor Ponta should leave the party so that the party has a chance.

On November 26th, 2019, President Klaus Iohannis stated that snap elections are a good solution, but it is yet too early to decide on a date. The President also added that mayors should run in two turns of elections, and presidents of county councils should be chosen from the ranks of the county councillors. In this sense, he stated that the subsequent legislative proposals submitted by the opposition parties ought to obtain a favourable vote. On the 28th, Dan Barna, USR president stated that he agrees with the president: snap elections are the solution for the current political deadlock.

On November 27th, 2019 PM Ludovic Orban stated that the Government might assume responsibility for any modifications to GEO 114/2018, should a majority not be achieved in Parliament. The procedure implies a high degree of political risk because it entails the right of the opposition to submit a censure motion in three days since the government submits its intention to adopt a draft bill.

External Affairs

On November 27th, 2019, the new EU Commission, led by Ursula von der Leyen, was approved by the EU Parliament. PM Ludovic Orban announced that the Romanian government stands in full support of the von der Leyen Commission’s objectives. The new Commission needs to be formally appointed by EU heads of state or government. Its five-year term is expected to start on 1 December.

  • New Commission approved by 461 votes to 157 against, with 89 abstentions
  • College of Commissioners to take office on 1 December for five years
  • The hearings process established the suitability of candidates
  • First woman Commission President and the largest proportion of female Commissioners to date

Fiscal and Political Updates

According to the OECD, growth will slow in Romania in 2020 to 3,2%, only to accelerate again in 2021 to 3,7%.
On November 25th, 2019, the Government loaned an additional RON 1,051 billion from banks on the internal market.

Data from the Ministry for Public Finance estimates a 4% economic growth this year and a nominal GDP increase.

On November 26th, 2019, PM Ludovic Orban stated that the government has tried to find a solution to increase the minimum wage but to have this measure based on real economic data as much as possible. Klaus Iohannis has underlined, on the same day, the importance of the budgetary reallocation, since there is not enough money to cover pensions.

According to the Minister for Public Finance, Florin Cîțu, the budgetary reallocation will prove that the budget was built on false information and the key areas from where money was stolen.
According to Bloomberg, the European Investment Bank has asked EU governments to increase investment in order to stimulate competitivity and consolidate economic growth.

According to a statement on November 27th, 2019, by the president of the Fiscal Council, no tax cut should happen, as the budget cannot absorb the shock of the pension increase in 2020. A dire perspective on the matter is also supported by Valentin Lazea, the chief-economist of BNR, who stated that there is no other alternative but to postpone the pensions increase scheduled for 2020.

The PM also believes that for 2020, reaching a deficit of under 3% will be a very difficult task. Daniel Dăianu also supports this statement, by concurring that a target deficit of 3,5% in 2020 would be truly an excellent performance. The vice-president of the Fiscal Council, Octavian Cozmâncă, added that the target 3% will not be reached unless the private sector is compressed and public spending is reduced. President Klaus Iohannis also chimed in, stating that he will personally insist that the 2020 budget be as close to the 3% deficit mark as possible.

Mugur Isărescu supported the approach of the Government, stating that he believes we must see what the real situation is like with the budget.

 

Issue Monitoring