Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Pro-Cyclical Policies

Published 04/27/2017, 08:33 AM
Updated 03/09/2019, 08:30 AM

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.

To read the entire report Please click on the pdf File Below

by Anna DORBEC

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.