Trying to fix Romania’s budget, via austerity measures, has come at a price for the sitting government. Prime Minister Emil Boc is under attack for cutting public salaries and raising taxes, things he had to do in order to qualify for a key lifeline of financial aid from the International Monetary Fund (IMF).
In a bid for survival, he’s now removing his economic and finance ministers ahead of a key confidence vote in the parliament.
The government has faced months of criticism from unions and the opposition, including a June no-confidence motion that Boc and his supporters won by eight votes.
Two opposition parties, the Social Democrats and Liberals, said yesterday they planned to file a new motion of no- confidence by year-end as they seek to form a government that will reverse Boc’s VAT increase and revive the economy. The two parties have 214 votes in the 471-seat legislature.
“The government has succeeded where the Hungarians have thus far failed in terms of keeping their IMF program on track,” Ash said. “Ultimately the price of this faith in the implementation of the program, and the tough austerity demanded as part of the program, is that the government could still fall.”
Romania’s path to fiscal sustainability could hit a political roadblock. Once again, we’re reminded how declaring budget fixes and implementing them are completely different matters. Other European governments will face similar hurdles.