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August 7, 2022

PM Orban says not favouring austerity measures, price freeze

Prime Minister Ludovic Orban said on Thursday that over 30% of the Romanian economy is affected by the novel coronavirus epidemic, noting that he is not favouring austerity measures or price freeze.

“Given that a large part of the economy has been affected by the epidemic, it is clear that economic growth will be affected. At the moment, work is being done, based on preliminary data provided by the National Institute of Statistics, in the forecast for the foundation of the budget revision. But, I can already say that an extremely important percentage of the economy is affected, over 30% of the economy is affected by the coronavirus. There is a clear risk of economic growth, revenues to the national budget, the social security budget, the unemployment budget going down. Basically, the blow to the economy by this epidemic is very strong. Therefore, we have started a process of wide consultation of the business community by areas to develop scenarios and especially to prepare for the time normalcy resumes,’ Oban told Digi24 private broadacaster.

He said he is not a believer in austerity measures, such as wage cuts and tax increases.

“Personally, I am not in favour of austerity measures. It has been obvious that austerity measures not only did not provide a solution to the previous crisis, but on the contrary, delayed economic recovery and perhaps increased the size of the crisis. I think the purchasing power of the population should be preserved, there must be consumption, and demand has to be ensured. We need certain financial injections in certain areas to help restart the engine. (…) All resources must be used smartly. On the other hand, we have been trying to keep a balance between these measures, neither to generate very high costs, nor to create cuts in incomes that affect market demand. We want the Romanians to return to work as soon as possible, in a normal life, to buy cars, homes, durable goods – we should not be scared and not spend more money on improving living standards,” said Orban.

The prime minister added that he is not even favouring prices being frozen.

“Throughout history, when prices went down products would disappear from the market to be sold on negative networks. We do not want to cap prices, we want to ramp up production, because it is the only solution to keep prices at a certain level. Especially in the case of Romania, which has a high dependence on imports and food, if we start freezing prices, we might end up without the products we cap prices on. Personally, I am favouring such measures only in situations where it is an attempt by traders to gouge prices. Always the best solution is to ramp up production,” he said.

Orban also mentioned that Romania is least exposed to a food crisis.

“Romania is the sixth country in the EU in terms of agriculture; it has fertile land, we have the capacity to produce food for a much larger number than 17-18 million citizens. We need to be ambitious to produce more,” added Orban, according to Agerpres.

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