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April 19, 2021

MEP Theodor Stolojan warns: Romanian Parliament, biggest risk at this hour

Parliament does not feel any kind of responsibility toward the Executive, PNL MEP Theodor Stolojan stated on RFI, commenting on an EC report according to which Romania faces a series of financial risks.

“The highest risk at this hour is the Romanian Parliament, which does not have or does not feel absolutely any kind of responsibility toward the Executive. Consequently, you see all the time that there are all kinds of draft laws that generate new budget expenditures, without taking into account the resources, this year I mean,” Stolojan stated on Thursday for RFI, asked to comment on an EC report. According to the report, Romania does not face macroeconomic imbalances however there are financial risks generated by foreign-owned assets, banking sector vulnerabilities, public sector salary hikes and pro-cyclical policies.

Theodor Stolojan stated that the Ciolos Government has the extremely difficult mission of maintaining the deficit at 3 percent, against the backdrop of “populist measures” proposed by lawmakers.

“So the Executive led by Dacian Ciolos has an extremely difficult mission, namely to hand over at the end of a year an economy, a budget that remains within the budget deficit framework of  3 percent and that would not explode in 2017 because of the populist measures that all kinds of MPs keep proposing,” Stolojan stated.

Stolojan said that the Government has to enforce the laws adopted by Parliament, stating that if that does not happen then the Government formed after parliamentary elections “will start by restoring the balances within the economy.”

“The Government will have to enforce the laws adopted by Parliament, because that is what rule of law means. Of course, in certain situations it can intervene with Emergency Ordinances. If that does not happen, of course in 2017 the Government that will be formed after the elections will start by restoring the balances within the economy, as has happened in fact on many occasions in Romania,” Theodor Stolojan answered when asked what the Executive should do if Parliament continues to approve populist laws.

Romania does not face macroeconomic imbalances, but there are financial risks generated by foreign-owned assets, by the vulnerabilities of the banking sector, by public sector salary hikes and by pro-cyclical fiscal policies, the European Commission announced on Wednesday.

“Romania is not facing macroeconomic imbalances. However, there are risks generated by the high volume of foreign-owned assets, by vulnerabilities in the banking sector, by pro-cyclical fiscal policies and by high salary hikes,” the European Commission shows in a report that assesses economic and financial policies.

“Against the backdrop of economic recovery measures, the high volume of foreign-owned assets has started to drop. With the support of the European Commission, measures were taken to consolidate the financial sector. At this moment, the banking sector is well-capitalised and has liquidities, but certain legislative drafts (…) show stability risks. Public sector salaries and the minimum salary have risen and tax cuts have been enforced. This situation risks leading to the emergence of pro-cyclical fiscal policies,” the European Commission emphasised.

According to the experts, pro-cyclical fiscal policies are the ones through which governments opt for raising the state budget and lowering taxes during a period of economic growth, reducing expenditures and raising taxes in case of recession. Such measures lead to the amplification of economic cycle variations.

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