Romanian liberal MP: PSD governing program could lead to crisis

Romania may face a massive economic crisis in the next years if the Social Democratic Party (PSD) implements the governing program that has helped it won the elections in December 2016, says liberal senator Florin Citu, the deputy president of the Romanian Senate’s budget committee, reports local Profit.ro. Citu, a former chief economist of ING Bank Romania, thinks that the program is “pharaonic” and “dishonest”. He argued that even a student in his freshman year at the economics faculty knows that implementing such a program would destroy the economy for future generations. Florin Florin Citu gave the example of 2008 when the government increased the salaries discretionary causing the budget deficit to grow to 7% of the GDP. He said that now is the time when institutions such as Romania’s National Bank or the Fiscal Council can prove their independence and courage. PSD’s governing program includes massive wage increases for the employees in the public sector and pension increases as well as significant tax cuts. The new Government plans to cut the individual income tax from 16% to 10% and to 0% for salaries under RON 2,000 starting January 2018. According to PSD’s governing program, these measures will be supported by a 5.5% yearly growth rate for Romania’s economy. Bogdan Glavan, a university teacher of Microeconomics, Macroeconomics and Monetary Economics, thinks that the big problem is that the PSD governing program doesn’t explain why the GDP will increase at the estimated level, a level that would support all the provided measures and expenses. The program has no credible analysis, according to Glavan. editor@romania-insider.com