Fiscal & Political Updates (December 27, 2024 - January 10, 2025)

Based on the report prepared by Ana-Maria Anghel & Cezar Petrescu

Kicking off 2025, Romania's political and economic landscape is marked by significant developments, from government reforms to international partnerships. Here's what you need to know about recent updates in internal and external affairs, fiscal policies, and recovery plans. ??

Internal Affairs: Key Political Developments

?? PSD-PNL-UDMR Governing Coalition 2.0

Romania's political scene has been reshaped following the December 8 elections, with the reformation of the PSD-PNL-UDMR Coalition Government. Leading the charge is PSD leader Marcel Ciolacu, alongside a leaner cabinet of 16 ministries.

?? Notable changes:

• PSD: 8 ministries, including Justice.
• PNL: 6 ministries.
• UDMR: 2 ministries, including Finance.

For the first time, PNL does not control an advising ministry, marking a shift in coalition dynamics.

??? Parliamentary Majority

The coalition boasts a strong majority with 243 out of 464 seats, ensuring control over the legislative process. Leadership highlights:

• Ilie Bolojan (PNL) becomes President of the Senate.
• Ciprian-Constantin ?erban (PSD) takes over as President of the Chamber of Deputies.

??? Presidential Elections: May 2025

Mark your calendars! The presidential elections are set for May 4 and 18, 2025, carefully planned to avoid overlapping with Easter holidays. While Crin Antonescu remains the coalition’s candidate, political uncertainty looms with independent and opposition contenders, potentially splitting the vote and boosting extremist chances. ??

?? External Affairs: Strengthening Partnerships

???? Romania Joins the Visa Waiver Program

?? January 10, 2025 marks a historic day as Romania officially joins the Visa Waiver Program, simplifying travel to the U.S. with electronic authorization via ESTA (starting March). This step reinforces Romania’s strategic partnership with the U.S., fostering stronger economic and security ties. ??

???? EU-Japan Strategic Partnership

The landmark Strategic Partnership Agreement (SPA) between the EU and Japan, effective January 1, paves the way for:

• Enhanced cooperation in security, energy, and innovation.
• Promotion of shared values like democracy and open markets.

This partnership underscores a commitment to a rules-based global order. ???

?? Fiscal and Economic Updates: Navigating Austerity

?? The Austerity Ordinance

The "Train Ordinance" (GEO 156/2024) introduces:

• Tax increases, including a rise in dividend tax to 10%.
• Reduction of microenterprise thresholds, pushing more businesses into higher tax brackets.
• Removal of fiscal benefits for sectors like agriculture, IT, and construction. ???????

While aimed at fiscal stability, these measures risk dampening business growth and increasing costs for consumers. ??

?? No Pension Increases

Pensions remain frozen in 2025, maintaining November 2024 levels. While stabilizing finances, this move could impact consumer demand, particularly in sectors catering to older demographics.

?? Will VAT Increase?

Despite Prime Minister Ciolacu's assurances, ambiguity surrounds a potential VAT hike. This uncertainty continues to erode public trust in the government. ??

?? Recovery Plan: Digitalization and Innovation ??

?? Horizon Europe Support

A new state aid scheme under the Horizon Europe programs will run until 2025, supporting enterprises and research organizations in advancing innovation and participating in EU partnerships. ??

?? NGO Digitalization

The extension of the Digitalization of NGOs Scheme aims to:

• Boost digital infrastructure.
• Enhance digital skills for staff and volunteers.
• Develop CRM platforms for better service delivery.

This is a step forward in fostering a tech-enabled civil society. ????

?? Final Thoughts

Romania faces a pivotal year in 2025. From political recalibrations to economic austerity and international cooperation, the decisions made today will shape the country’s trajectory for years to come. As professionals in public affairs, business, or governance, staying informed is essential to navigate these changes effectively. ??

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