The ruling coalition in Romania, in the meeting of January 26, failed to agree over several preliminary decisions that would unlock the construction of the 2026 budget planning, according to Adevarul.ro, citing sources familiar with the negotiations. A 6.2%-of-GDP deficit target, including 0.12% of GDP envelope for (to be decided) "economic relaunch measures," was announced and will reportedly be pledged by finance minister Alexandru Nazare in his January 29 meeting with the European Commission in Brussels.

In terms of procedure, the ruling coalition has deferred the agreement on the public administration law but agreed to add an "economic relaunch" package – with its content still to be decided.

Both bills will be promoted concomitantly, under a single accelerated procedure in Parliament, the ruling coalition's members reportedly agreed. The joint procedure was expected until recently for January 29 – such as to unlock the construction of the 2026 budget planning expected for mid-February.

The key deadlocks that the ruling coalition failed to address on January 26 are at least two: the distribution of the local taxes (higher, under the provisions of a previous budgetary measure already legislated and enacted) and the budget of Bucharest. On the former, prime minister Ilie Bolojan reportedly insisted on collecting the money before redistributing it to regional administrative units – while the local administration insists on keeping it entirely.

About the budget of Bucharest, president Nicusor Dan reportedly insists on allocating the bulk of the money to the central City Hall (in line with a referendum held last year) – as opposed to being distributed to the six District City Halls. The Social Democrats (PSD) support both disputes of the local administrations (District City Halls, respectively).

The "economic relaunch" package remains more of a bargaining instrument used by the Social Democrats to achieve their goals, but the Liberal Party (PNL) drafted some guidelines as well.

The Social Democrats mentioned guarantees for investment loans, tax credits for investments in strategic industries, with no consolidated strategy, however. On January 26, PSD also mentioned lump sum subsidies paid to pensioners this year to compensate for the higher prices.

The Liberals' guidelines for the "economic relaunch" package, circulated during the meeting that preceded the ruling coalition's meeting, reveal the lack of a consolidated strategy: balancing the trade balance through measures dedicated to increasing exports of Romanian products; and increasing the embedded value added of domestic production, so that the Romanian economy generates more competitiveness and investment (sic!).

Prime minister Bolojan and PNL representatives, along with those of USR, argued for promoting the public administration reform bill and the economic relaunch measures under separate procedures in Parliament - but PSD and UDMR rejected this idea and argued that both bills must be promoted simultaneously, as was established five months ago, Agerpres reported.

Especially since "all parties agree in principle with the (not yet announced) measures in the economic recovery package, and their total impact (including the PSD proposals and those of the other parties) is only 0.12% of GDP," Agerpres emphasised, as reported by Bursa.ro.

iulian@romania-insider.com

(Photo source: Inquam Photos/Octav Ganea)