Since the parliamentary elections in December 2016, Romania has been governed by a coalition between the Social Democratic Party (PSD), the clear winner of the elections, and the Party of the Alliance of Liberals and Democrats (ALDE). Formally, government has been led by a succession of short-lived prime ministers, including Mihai Tudose (June 2017-January 2018) and Viorica Dăncilă (since the end of January 2018). PSD leader Liviu Dragnea, who was convicted of voting fraud and therefore barred from becoming prime minister, has pulled the strings behind the scenes.
Soon after taking office, the new government launched legislation aimed at decriminalizing and pardoning certain offenses. Broadly understood as an attempt to help politicians and others accused or convicted of corruption, including PSD leader Dragnea, these initiatives sparked an unexpectedly strong public outcry. Hundreds of thousands of people took to the streets, forcing the government to withdraw the decrees. Since then, there have been conflicts between the governing coalition on the one hand and President Klaus Iohannis, the opposition and civil society on the other. During the period under review, the governing coalition continued its efforts to strengthen its influence vis-a-vis the judiciary while discrediting and weakening the much-acclaimed National Anti-Corruption Directorate (DNA). These attempts culminated in the dismissal of Laura Codruța Kövesi, the head of the DNA, in July 2018. The European Commission and other international observers have strongly criticized the erosion of democracy in Romania.
While real GDP growth in Romania was almost halved in one year, falling from 7% in 2017 to 4% in 2018, the unemployment rate further declined and reached a ten-year low in December 2018. The Tudose and Dăncilă governments have pursued an expansive fiscal policy. Brought about by income tax cuts and further increases in public sector wages and pensions, the fiscal deficit exceeded 3% of GDP in 2018, and was the second highest in the European Union for that year. The Tudose and the Dăncilă governments have done little to improve the medium- and long-term prospects of the Romanian economy and have not addressed long-standing problems such as a weak education system, poor infrastructure, cumbersome procedures for businesses and frequent regulatory changes. Public investment recovered only slightly from its post-EU accession low in 2017.
R&D funding cut,
Contrary to the 2014-2020 National Research, Development and Innovation Strategy, the Dăncilă government cut rather than increased its R&I budget. The allocation of research grants has been blocked by bureaucratic impediments, the central government’s withholding of funds and the mass expulsion of foreign scholars from adjudicating committees. Despite significant wage increases in the health sector, Romania has struggled to attract, train and retain health professionals.
Few meaningful institutional reforms
Institutional reforms during the period under review have been largely confined to changes in the portfolios of ministries. Most notably, the Dăncilă government decided to split the Ministry for Regional Development, Public Administration and European Funds into two separate ministries and to abolish the Ministry of Public Consultation and Social Dialogue. However, these changes have failed to improve the government’s strategic capacity. The absorption of EU funds has remained low, and public consultation has further lost importance. There have been no institutional reforms to address long-standing problems such as limited planning capacities or the low quality of RIA. The pledged reforms of subnational administration have not been adopted.