The Governing Program is not even a “letter of intent”

They added that the government should be formed prior to the drafting and presentation of a budget program.

The current Governing Program contains a series of measures to soften the impact of the economic crisis on Romania’s economy. One of the main goals of this program is the countering of the negative effects of the financial crisis, and the maintaining of economic stability. Thus, the program is considering keeping the 16 percent flat tax, narrowing the budget deficit to 2.5 percent of GDP in 2009, introducing a differentiated VAT [Value Added Tax] ranging from 5-25 percent, and applying a “Robin Hood” tax for revenues generated by “external circumstantial factors.” “They would have done better to wait a month or two to come up with the necessary details, and a complex budget program. You cannot talk about a 2.5 percent budget deficit when you have not included revenues and expenses. But there is also a positive side. They seem not to have understood the severity of the situation,” Matei Paun, Managing Partner of the BAC Investment group, told Business Standard.

Daniel Daianu, former Minister of Finance, said this “is not an operational economic program. It is a list of goals, which will be impossible to meet. Budgetary premises are missing, we are unaware of the revenues or the resources we are counting on, when proposing these goals. The government must be formed. The Ministry of Finance must show us what resources there are and where these will come from. Beyond structural and cohesion funds, we must plan to attract new resources. One option is attracting a €7-8 billion loan from the European Bank for [Reconstruction and] Development.”

The present Minister of Finance, Varujan Vosganian, is also criticizing the PSD-PD-L program. “You cannot simultaneously cut taxes and double allocations,” he said, adding that the budget

deficit will widen to 6 percent of GDP in 2009, if these measures are applied. According to Vosganian, doubling child allocations means a budgetary effort of €250 million, while cutting VAT to five percent for basic foodstuffs implies a €200 mln drop in revenues. Mihai Tanasescu, former PSD Minister of Finance, believes the program is an “ambitious” project. Moreover, Tanasescu indicated that, to reach a budget deficit of 2.5 percent of GDP, what is needed is a restructuring of public expenditures, a freeze or at least a moderate rise in salaries. But the Governing Program is mostly counting on higher salaries and pensions, focusing on social security measures. The future government is also formulating a series of forecasts regarding macroeconomic indicators for the coming four years. It is estimating economic growth rates of 3.5, 4.5 and 5.5 percent for 2009, 2010, 2011, respectively, below the official estimates of the National Prognosis Commission (CNP). For 2012, data coincides, with Romania’s economy to register a six percent growth rate.

‘It is not an operational economic program. It is a list of goals, which will be impossible to meet' Daniel Daianu former Minister of Finance