Will Bolojan Dare to Deal with the „Sacred Cows”?

As expected, Nicușor Dan entrusted Ilie Bolojan, acting president of the National Liberal Party (PNL), with forming a government. Dan had already indicated during the May presidential campaign that, following Klaus Iohannis’s resignation in February, he considered Bolojan – who served as interim president – the top candidate for prime minister. This was no coincidence, as the 56-year-old politician from Oradea, who has a technical university degree and later, like Dan, obtained a degree in mathematics, gained national recognition for his streamlining and efficiency measures concerning the state. He began his public administration career at the bottom of the ladder as a city council member, later served as mayor of Oradea, prefect, president of the Bihor County Council, and Secretary General of the Government.

The whole country watched enviously in the 2000s as, through the restructuring of vehicle registration, passport issuance, and population registries, passport and car registration papers could be processed in Oradea in just two hours.

• He reduced staff at city hall by 30%
• and by 40% at the county council.
• Three-quarters of the developments in the county seat (EUR 550 million) were funded by the European Union.
  
  As Secretary General of the Government, he also made waves by removing all televisions from government offices as one of his first measures, to prevent employees from being distracted by TV.

Bolojan is known for enforcing austerity, cuts, and slimming down the bloated state apparatus – an expression frequently used in recent campaigns. In the past, he didn’t care about party or public opinion when confronted with protests over layoffs or expropriations required for infrastructure projects.

Even before his cabinet was approved by parliament, Bolojan made it clear to the public that his government would implement unpopular measures to restore fiscal balance. This is an urgent task, as the drawn-out elections have left Romania severely behind on financial corrections, prompting repeated warnings from Brussels. At last week’s meeting of ECOFIN the EU's Economic and Financial Affairs Council, determined that, despite recommendations, the Romanian authorities had taken no effective action to reduce the deficit. As a result, if Romania does not take swift steps to restore fiscal balance, it risks having its access to EU funds suspended.

Despite the warning, Romania was granted a grace period until October to adopt the expected measures. Meanwhile, another credit rating evaluation is expected in August, and at this moment, it cannot be ruled out that Romania might fall into the lowest grade category, deemed unsuitable for investment. Such a downgrade would carry heavy consequences, which is why the government cannot delay efforts to balance the budget.

The document lists several tax increases (including raising the reduced VAT rate), imposing health insurance contributions on pensions above 4,000 lei, taxing bank profits, eliminating deputy mayor positions in small towns, and reducing central administration staff by 20%. However, these steps merely scratch the surface, as many of the proposed measures are vague commitments lacking specifics. Altogether, they seem insufficient to bring order to the country’s finances.

Nonetheless, the issue goes beyond just money. Romanian society – from pensioners to taxpayers and entrepreneurs – understands the country’s dire situation and is even willing to contribute to recovery (even if they are not to blame for the ballooning deficit), but only if they see that the state, the government, and ruling parties show solidarity. It’s simple: people expect the four-party coalition to curb excessive tax evasion and VAT fraud (in which Romania is a „European champion” with 30% uncollected VAT), crack down on economic crime, eliminate special pensions, end the undeserved privileges granted in the public administration, and tackle corruption.

If progress could be made in these long-standing issues that have hindered the country's development for decades, Romania would make tremendous strides in reducing the budget deficit. And – equally importantly – the public would more easily accept austerity measures affecting their pockets because the government would also gain moral legitimacy to enact unpopular reforms.

But if the government does not dare to touch these long-standing „sacred cow” issues, it will find it very difficult to increase state revenues. At the same time, pensioners, taxpayers, and entrepreneurs will feel like they’re being duped again – and in that case, the government will become far more unpopular than the natural fallout from looming austerity would suggest.

korábban írtuk

Hozzá mer nyúlni Bolojan a „szent tehenekhez”?

Bár a nehéz pénzügyi helyzettel küzdő Romániának mihamarabb korrekciókra lenne szüksége, a májusi államfőválasztás után jókora késéssel, egy hónapos konzultációt követően jött létre a négypárti koalíció Bukarestben.