Romania’s PSD-ALDE government survives again vote of no confidence in Parliament against tense economic background

Sorin Melenciuc 20/12/2018 | 15:54

Romania’s opposition parties failed to topple the PSD-ALDE government led by Viorica Dancila despite tense economic situation following the announcement of new taxes in major economic sectors. The motion failed on Thursday due to insufficient votes.

There were 161 votes for the motion and three against it.

The PM was in Parliament to defend her mandate: “I do not resign because I have the certainty that Romania is on the right track,” said Dancila.

In a speech held before the vote, the head of the Union to Save Romani (USR) accused the government of doing everything to prevent Liviu Dragnea, the PSD head.

“Romania is now led by a convicted criminal, and a prime minister who has difficulty in reading the texts that others put in front of him,” Dan Barna said.

Meanwhile, the president of the Democratic Alliance of Hungarians in Romania (UDMR), said his group will not vote for this motion, signaling that the attempt to bring down the government will fail.

“Nor are we satisfied with the Government’s work. In two years, there has been no advance in decentralization,” he said.

The vote was conducted in a tense economic period following the announcement of new taxes in major economic sectors.

On Tuesday, the Finance minister Eugen Teodorovici said that the government will introduce a tax on bank assets of 0.9 percent from January 1st, 2019 and will cap the retail and corporate gas price at RON 68/Mwh.

Experts say that capping internal natural gas prices will hit hard the two main gas producers in Romania, Romgaz and OMV Petrom, and will limit investment in gas fields, while the advantages for retail consumers are only for short term.

EU competition legislation bans such practices and energy directives impose a liberalization of gas prices, which Romania had already done by April 2017.

If the proposal passes, Romania may risk infringement procedures by the European Commission. Some experts also argue that such a measure will favour gas imports from Russia.

The Romanian government will also introduce major changes in private pensions scheme. The government will slam pension funds’ fees and will allow contributors to take their money out before retirement.

“The Pilar II pension funds management fee will be reduced from 2.5 percent to 1 percent,” Teodorovici said.

Following the announcement, the Bucharest Stock Exchange crashed on Wednesday and investors lost EUR 3 billion in one session.

 

 

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