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March 3, 2021

Basescu: Our priority is fiscal consolidation

Romania’s president, Traian Basescu, said the country started to be officially in crisis at the beginning of 2009, Mediafax informs, quoting ‘Financial Times’. He also agrees that Romania started to get into crisis in dramatically bad conditions. Hereby, “in 2008 we reached growth of 7.4 per cent of GDP and a budget deficit of 5.5 per cent, with zero resources. But there were a number of laws that were introduced in 2007 and 2008 which affected us extraordinarily in 2009. For example, doubling pensions; increasing wages by over 50 per cent; introducing two years’ vacation for maternity leave for women; introducing bonuses for employees in the public sector,” Basescu also said.

He believes all these things were done by the government in 2007 and 2008 with the idea that they would win the elections in 2008. He asserts he was one of the politicians warning Parliament and the government about the increase in pensions, which was unsustainable, and about the increase in wages, which was unsustainable too.

According with Basescu, this explains the two long years of recession in Romania. “In 2009 we were not determined enough to take tough measures”, the president said. His message is grim but consistent: “Our priority is fiscal consolidation. After that we will look at how we will grow.” Asked about Nabucco project, Basescu said that it is a European project, “so we will entirely support it. We did not want to take any step that would undermine Nabucco. It’s our objective to remain European, on one hand. On the other hand, we strongly believe that Europe needs more ways to be supplied, and more sources.”

Half-hearted austerity measures last year failed to tame a 7 per cent-plus budget deficit – requiring more drastic steps this year. Narrowly surviving two no-confidence votes, the centre-right government of PM Emil Boc has slashed public sector wages by a quarter and benefits payments by 15 per cent, and cranked up VAT from 19 to 24 per cent.

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