Power sharing between the centre-left Social Democrats, the big winners of the December 2016 legislative elections, and the president from the centre-right National Liberal Party have gotten off to a rocky start. Anti-corruption protests have weakened the new majority, which has turned to public spending to bolster its image. Yet with the economy going strong, the increase in fiscal expenditure will only have a pro-cyclical effect. Fiscal deficits are mild for the moment, but excessive populism risks damaging macroeconomic stability. The fiscal discipline imposed by the EU should nonetheless help the government avoid any excessive overruns.
Power sharing gets off to a rocky start
Following the legislative elections of 11 December 2016, Romania elected a new government headed by the Social Democrat Sorin Grindeanu. Thanks to an alliance between the Social Democrats and the Alliance of Liberal Democrats, the new government enjoys a large majority in both houses of parliament (with 250 seats out of a total of 465). The National Liberal Party of President Klaus Iohannis suffered a bruising defeat, and no longer holds but 20% of the seats in the Senate and the Chamber of Deputies. As a result, Romania has entered a period of power sharing between a centre-left government and a centre-right president.
The Social Democrat’s reputation was tarnished by corruption scandals that forced the previous government to resign in 2014, and prevented the party’s leader, Liviu Dragnea, from being named the prime minister of the current government. Against this backdrop, the newly elected government tried to push through a decree decriminalising several misdemeanours, including minor corruption offenses, in late January 2017, triggering a public outcry unparalleled since the Romanian revolution of 1989. In mid- February, between 50,000 and 70,000 protestors took to the streets in front of government headquarters in Bucharest, and as many as 20,000 protesters gathered in the other cities.
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by Anna DORBEC