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September 18, 2019
EDITORIAL

The crisis Government…

The whole economy is passing through the crisis that we all know. A crisis which does not belong to us, but from whose causes we are not alien. It came from the United States, crossed the Atlantic and embraced Europe. In Romania, its effects were enhanced by the internal policies from 2008 (and even earlier) and from 2009. Let us remember the “charities” on the eve of the elections of the Liberal Government headed by Calin Popescu Tariceanu. Pension and salary rises, holiday and other bonuses for all sorts of “special” activities of the civil servants from all the branches and so on. All these obviously happened in an electoral year, the resources obtained through the economic growth being directed towards consumption instead of investments as it would have been normal. Thus, the budgetary deficit rose to over 5 per cent in 2008, although it was a year with a high rate of economic growth.


But, it would be a mistake to throw the whole responsibility on the shoulders of the Liberals. In the first two years of governance they were partners of the Democrat-Liberals (PDL) and we cannot say that the assignment of the investments in infrastructure, education, health or other domains of activity were intensive. With the removal of PDL from governance, PNL came to depend on the support of the Social-Democrats in Parliament. Only the “aversion” for the Head of State and the wish to survive in the governmental seats made PNL to collaborate with PSD. For the Social-Democrats the variant was preferable to the variant in which President Traian Basescu would have remained with “all the cards” in his hand. As a result, the Liberals made repeated concessions to PSD in regard to the populist measures with a social touch, which did nothing but burdened the budget. Thus, the responsibility for the excesses from the past year and for others in general must be distributed very carefully…


Concurrently with the electoral campaign, the parties launched themselves in a whirlwind of electoral promises without coverage. The best known example was to increase the teachers’ salaries by 50 per cent, idea promoted both by PDL and PSD, although the premier from that time, Tariceanu, repeated permanently that the measure was economically unsustainable.


In power now is the PDL-PSD alliance, meaning those who promised wonders exactly when the crisis was more acutely felt in USA and Europe. Now, they are in the situation to answer in court for their promises, as the magistrates, the teachers and other social categories start legal proceedings against the Government for the failure to enforce certain laws.


But, beyond the legal problems, the current Government is a crisis one, although the Government itself is in a crisis. Not an acute, punctual crisis, but a long-term, permanent and insoluble one. A coalition between two antagonistic parties has the tendency to pull into two different directions. Which actually happens. From disputes over positions, over appointments at the head of some institutions, up to the adoption of some efficient measures able to fight the crisis – all are affected by the tense relation between the two parties. As if it were not enough, the presidential elections from autumn enhance even more the crisis of the leaders of the two formations, to which adds the happy or unhappy involvement of President Traian Basescu in the permanent dispute.


Therefore even the anti-crisis measures are deficient. The scheduled investments of EUR 10 bln in infrastructure in 2009 remained mere tales. And it seems that we can speak at the end of the year of only EUR 1.5 bln. The economic growth has turned into negative growth, and then into recession: now the story goes about a 6-8 per cent fall of GDP. Uninspired was the measure to introduce the lump sum tax, which does not help the firms which are in difficulty because of the crisis, causing them to sink even deeper. Moreover, the receipts of the state to the budget decrease dramatically and the state is obliged to borrow from everywhere in order to cope with the current expenditures made with the salaries and pensions. And this happens in the context in which the civil servants, the judges, the teachers, the medical staff and others request higher salaries and the granting of the bonuses promised or granted through law by Parliament, by the representatives of the parties which did not even think to not give more to the population.


Any discussion regarding some efficient measures likely to stimulate the economic activity is welcome. However, the current situation, after six months of PDL-PSD governance, is not at all happy. The reduction of internal expenditures promised by the Government is minimum. Moreover, new ministries were set up which do nothing but spend the already thinned down public money. The private actors from the economy say that agriculture, constructions and energy allegedly are the domains that can help the country to overcome the recession. But the Government minds its own business. Actually, Emil Boc Government is too concerned about its own survival and, therefore, the measures with a definite deadline, which would involve a common effort of ministries and various areas of activity miss completely. How could a Social-Democrat cooperate efficiently with a Democrat-Liberal in this electoral year, when the stake is so big? In fact, we see a quasi-general lack of involvement of the government, when everybody requests financial resources but almost no one spares.


Thus, the maturity is expected to come after the presidential elections from autumn, unless some measures are taken. In exceptional situations, exceptional measures are required. But how can act a Government, which is already in a crisis, in order to fight the economic crisis?


But, it is clear for more and more persons that the level of the expenditures is too big compared to the revenues. First, the central bank requested the Government, in a veiled way, to proceed to the reduction of the expenditures. Now, the turn of IMF has come to caution over the need to cut expenditures. The increase of the budgetary deficit (requested from the European Commission and IMF) does not solve the situation. The development based on consumption has finished, the sooner everybody understands it, the better. But since a consistent economic decrease of 6-8 per cent is expected in 2009, the solutions of the Government are limited. It must convince the population to tighten the belt. But who will inform them and who will cut the expenditure: PDL or PSD? Who will assume the responsibility for the lay offs and the reduction of the salaries? That is the question!

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