Oct 22nd 2010
by V.P. | BUCHAREST
IT LOOKED like April Fool's Day. On Tuesday lawmakers from Romania's ruling Democratic Liberal Party (PDL), including ministers, voted to slash VAT on food and eliminate income tax on pensions worth less than €500. It seemed an odd thing to do, given that the government had raised VAT to its current level only a few months earlier, as part of a deal with the IMF.
Oops. It was an "error", said the finance minister. The MPs had actually thought they were voting to scrap the two proposals. The PDL is now hoping that the president will not sign the bill into law, and is fast-tracking a new draft to "correct" the mistake. The government may also adopt an "emergency ordinance" to fix the problem.
But this latest blunder fits into a weary tradition of dysfunctional policy-making in Romania, where laws often appear to be drafted minutes before parliamentary votes with little thought to long-term strategy or financial impact.
A review of the Romanian government's structures drafted by the World Bank and seen by The Economist speaks of a "prevalence of ad-hoc decision making" and slams the "frequent use" of emergency ordinances that override approved parliamentary laws. Despite plans announced five years ago to measure results against plans, nothing of the sort has taken place, the document reads. There is also no prioritising of policies and "laws are commonly approved without adequate funding."
The review issues a series of recommendations on how to improve national decision-making. Such proposals are nothing new, says Alina Mungiu-Pippidi from the Hertie School of governance in Berlin.
"In the last decade, Romania received a lot of advice, technical assistance and funding to improve its policy formulation and implementation capacity", she says. "Romania's quality of governance might not have induced the 2009-2010 crisis, but it does seem increasingly that it contributed to its severity and duration."
With the economy still in recession and a second IMF loan being negotiated in Bucharest, the latest blunder is fuelling calls for the government to step down. Emil Boc, the prime minister, and his team are bracing themselves for a test next Wednesday, when parliament will debate an opposition-sponsored no-confidence motion that accuses the government of having "waged war" against its own people with its austerity measures, while "doing nothing to kickstart the economy."
Mr Boc is confident he will survive the vote, as he did, just, in June. Yet following acabinet reshuffle in early September, there is a tranche of disgruntled PDL members who, with non-affiliated MPs, could swing the balance this time.