"Make cuts to the corrupt, not to the students. Students, fight! You deserve scholarships!", angry students chanted in the streets of Bucharest at the end of June, ARD writes. Protests by students who do not know how to finance their studies took place in the capital and other cities of the country, after the government completely cut the budget intended for scholarships.
Romania needs to save: the budget deficit of 9.3% is the highest in the EU. Liberal-conservative Prime Minister Ilie Bolognese, who has been in office for only a few weeks, announced in parliament the beginning of a strict austerity course. "The decision is not easy for me or my colleagues, as we are aware of the burden the package of measures represents for citizens. But it is an emergency and an act of responsibility," he was quoted as saying by ARD.
"I expect difficult times"
The most important element of the austerity package: VAT is increasing by 2%. In addition, the electricity market is planned to be liberalized. The July bills will be the first in which Romanians will have to pay the full price of electricity again - in some cases, this will mean doubling the amounts due. And this does not bode well for consumption, the German public media outlet points out.
"In such a situation, everyone will reconsider their spending," Calin Rotarus, who runs a music school in Bucharest, told ARD. He is very worried about the future. “After all, the first thing that is cut is the cost of culture, luxury, recreation and travel. And since my business is in the cultural sphere, I expect difficult times.“
Romania spends too much
Romanian President Nikusor Dan also realizes that difficult times are ahead. He is non-partisan and has set himself the goal of fighting corruption and the shadow economy.
Dan, who is a professor of mathematics, tried to illustrate the situation with the Romanian budget so that everyone would understand where the problem lies. “For years now, we have been paying for a small pizza and eating a large one. It is clear that this difference has to be paid by someone.“
The privileges of civil servants remain for now
“The ordinary people will pay for it“, replied the president's main opponent – the ultranationalist Gheorghe Simion, who lost the runoff against Dan in May, as ARD recalls. He readily criticizes the measures: “You increase VAT and make fun of Romanian enterprises, but what I like most about the government program is that you are removing subsidies for political parties from the budget“.
His hint is sarcastic, since the government will not touch the privileges of civil servants for early retirement and their generous pensions for the time being. This is planned to happen only at a later stage – in order not to alienate the clientele of the Social Democrats, who are part of the ruling coalition.
A credit rating at the level of "junk"?
The fact is that austerity is needed in Romania - there is unanimity between the government and the European Commission on this issue, ARD notes. Last week, the Prime Minister insisted that the rating agency „Fitch“ not lower the country's rating to the level of „junk“. The other two main rating agencies - „Standard&Poors“ and „Moody's“ - will present their opinions in the fall. By then, the government should have achieved its first successes in the field of savings.
Author: Christoph Vös