SNAPSHOT OF POLITICAL SCENE

 2017

  •  The beginning of the PSD-ALDE`s mandate was marked by mass street protests against intention of Government to pardon prisoners and decriminalize certain crimes, including abuses committed in office, by passing an Emergency Ordinance;
  • A political premiere of the Romanian politics occurred as PSD-ALDE coalition voted against its own Government. Sorin Grindeanu was ousted in June through a negative vote in Parliament;
  • Mihai Tudose was appointed as Prime-Minister at the end of the same month and formed a new cabinet;
  • Only after three months from the new cabinet`s mandate, signs of conflict reappeared within ruling coalition between PM Mihai Tudose and Liviu Dragnea. Prime Minister Mihai Tudose managed to impose a governmental reshuffle to the ruling coalition as he threatened to resign in case his proposal was rebuked;
  • Laws of justice were initiated within Parliament as the ruling coalition needed more political control over the main judicial institutions. The laws were criticized by both civil society, magistrates, but also by external partners;
  • Justice became one of the hot topics on the PSD-ALDE agenda as PSD leader Liviu Dragnea is under a new investigation of fraud in a file instrumented by Anti-Fraud European Agency and Anti-Corruption Directorate which looks at the activity of the controversial company, Tel Drum;
  • The decisions of the PSD-ALDE coalition determined a continuous social unrest at the level of the society.

 2018 

  • Justice will continue to be a hot topic on the political agenda, given specific interest of members of the coalition to compromise the position of National Anticorruption Directorate and fight against corruption;
  • Given the justice issues, new protests will be organized against the ruling coalition also next year;
  • The perspective of 2019 presidential elections will have an important impact on both ruling coalition and the opposition and will change discourse and actions of the politicians. Most of the attacks will be directed towards President Klaus Iohannis, as an attempt of the ruling coalition to put under question his legitimacy and decrease public support of the president;
  • At the level of PSD and ALDE will start intense negotiations in 2018 in order to propose a candidate for 2019. The result of the negotiations will impact also the relationship between Liviu Dragnea and Calin Popescu Tariceanu. The PSD leaders, will try to shape their public image for a future candidacy;
  • President Klaus Iohannis will have to define his political platform for running in the elections from 2019;
  • 2018 will be also the year in which new opposition political parties will become more visible on the political scene, among which Platform 100 of the former Prime-minister Dacian Ciolos, launched in 2018;
  • From an external point of view, Romania will have to prepare the Presidency of the European Council.

  SNAPSHOT OF ECONOMIC TRENDS

 2017

  •  After winning the elections in 2016 through a program that captivated the interest and votes of the electorate, PSD started in January the implementation of the Governing Program;
  • During Sorin Grindeanu`s mandate, the Governing Program was rather orientated towards stimulating the private sector by elimination of taxes, decrease of VAT and support for the small medium enterprises, but also on social measures such as increases of pensions and salaries;
  • High public spending and lower tax revenues from the first months of governing resulted in a widening deficit and dismissal of the majority of the political promises made by PSD during the electoral campaign;
  • The Tudose cabinet changed economic perspective of the Governing Program and adopted measures with negative impact on the private sector. A `fiscal revolution` which reorganizes fiscal behaviour of companies was rapidly approved by the Government at the end of 2017. Private sector and trade unions reacted against the plans of the Government;
  • Although Romania registered a growth of 8%, mostly based on consumption rather than investments, the international financial organizations remained sceptical and asked Romanian Government to follow a macro-prudential path.

 2018 

  • Doubts about the sustainability of the country’s current growth path will remain and deepen, as the upswing has been largely spurred on by populist, pro-cyclical wage hikes and tax increases;
  • The fiscal deficit will continue to balloon as a result of public expenditures from 2017 and could force the Government to reign in its ambitions if it is to avoid a hard landing down the line;
  • Starting 1st of January 2018, the majority of the measures comprised in the so-called `fiscal revolution` will enter into force, obliging private sector to comply to the new conditions. The most problematic measure remains transfer of contributions from employer to employee, which will determine the new salary scale for the private sector. Although, most companies will increase salaries, other employers are reluctant to new wage conditions;
  • Although contested both by private environment and private sector, PSD-ALDE will have to continue the fiscal crusade as a need to balance national economy and to increase state budget incomes;
  • Warnings from the international financial institutions will grow in intensity as Romanian economy is closely scrutinized, given the instability of the fiscal area.

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