Romania's next government likely to include all four pro-European parties, party leader says
Romania's President Nicusor Dan speaks during a press conference with Moldova's President Maia Sandu following their meeting in Chisinau, Moldova June 10, 2025. REUTERS/Vladislav Culiomza
Romania's next government likely to include all four pro-European parties, party leader says
BUCHAREST - Romania's new government will likely include all four of its pro-European parties after weeks of negotiations, centre-left Social Democrat leader Sorin Grindeanu said on Thursday following talks with centrist President Nicusor Dan.
Dan won a divisive presidential election last month despite a strong challenge from the increasingly popular far-right but not before borrowing costs rose sharply and the leu currency crashed.
He must now nominate a prime minister to tackle the highest budget deficit in the European Union, and the new government has until end-June to approve fiscal measures or risk a ratings downgrade from the last rung of investment grade.
Dan's first choice for prime minister is Liberal Party leader Ilie Bolojan, who also has the backing of centre-right Save Romania Union and the ethnic Hungarian Party UDMR.
But the centre-left Social Democrats, without whom a ruling majority cannot be achieved, have pushed back against the idea of supporting the leader of a different party for the post and have proposed a yet-to-be-agreed rotating premiership to run until Romania's next parliamentary election in 2028.
"Based on what we discussed - economic measures and political agreement - things seem headed in the correct, constructive direction," Grindeanu told reporters after consultations with Dan, adding that he saw an 80%-90% chance that all four parties would form the next government.
The European Commission, ratings agencies and analysts have said Romania cannot reduce its budget deficit over seven years to the EU's threshold of 3% of national output, as agreed, without hiking taxes. However, Dan and the four putative coalition parties have proved reluctant to enforce unpopular tax hikes, focusing instead on possible state spending cuts.
The fiscal package will likely save around 30 billion lei ($6.85 billion) and entail an equal mix of spending cuts, postponed investments and tax hikes, politicians said.
Sources have said the main value-added tax could rise to 21% from 19% despite vocal public opposition from Dan and party leaders. REUTERS
Join ST's Telegram channel and get the latest breaking news delivered to you.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
35 minutes ago
- Straits Times
Putin says 'the whole of Ukraine is ours' in theory, may take city of Sumy
Russia's President Vladimir Putin speaks during a plenary session of the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia, June 20, 2025. REUTERS/Anton Vaganov Putin says 'the whole of Ukraine is ours' in theory, may take city of Sumy ST PETERSBURG - President Vladimir Putin said on Friday that Russians and Ukrainians were one people, "and in that sense the whole of Ukraine is ours," and said he did not rule out Russia taking control of the Ukrainian city of Sumy. But Putin, speaking at an international economic forum in St Petersburg, said Russia had never doubted Ukraine's right to sovereignty, but noted that when Ukraine declared its independence in 1991 it was as a "neutral state". Putin, who says Russia is fighting in Ukraine to protect its own security, was answering a question about Russia's war aims. "We have a saying, or a parable," Putin said. "Where the foot of a Russian soldier steps, that is ours." Kyiv and its Western allies have rejected Moscow's claims to four Ukrainian regions and Crimea as illegal, and Ukrainian President Volodymyr Zelenskiy has repeatedly rejected the notion that Russians and Ukrainians are one people. Putin said Russian forces were carving out a buffer zone in Ukraine's Sumy region in order to protect Russian territory and said he did not rule out those same troops taking control of the regional capital of Sumy. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
35 minutes ago
- Straits Times
Latvian president believes NATO will overcome obstacles, meet 5% goal
RIGA - Latvia's president expressed confidence NATO would agree to a new higher defence spending target demanded by U.S. President Donald Trump, despite Spanish objections, saying the alliance had little choice given the growing threat from Russia. Spain on Thursday asked to opt out of the plan to increase members' defence spending to 5% of their gross domestic product, as requested by Trump, a move which could derail next week's NATO summit at the Hague. Any agreement to raise defence spending needs unanimous approval by the 32 member states. Latvian President Edgars Rinkevics told Reuters on Friday he understood why countries further from Russia might have difficulties convincing their voters to spend more on defence. But he said the need was pressing. 'I do hope there is the understanding in Madrid that this is a critical time for the Alliance, both when it comes to (increasing) its defence capabilities, but also to the Trans-Atlantic relationship,' he said in an interview in Riga. 'I think that they don't have much of a choice,' he added. At an estimated 1.28% of GDP, Spain had the lowest proportion of expenditure on defence in the alliance last year, according to NATO estimates. Latvia and fellow Baltic states Lithuania and Estonia are urgently ramping up their militaries, fearing that their neighbour and former overlord Russia could push on from its 2022 invasion of Ukraine to take more territory. They spent more than 3% of GDP on defence this year, and have committed to top 5% for the next few years. "We are saying that we need to spend as soon as possible now in order to avoid a worst-case scenario, spending much more later," Rinkevics said. "While Russia is stuck in Ukraine, that possibility of a direct military attack is not very high," he said. "But it may change very, very quickly ... if a development in Ukraine leads Russian leadership to believe that NATO is weak, that Ukraine is defeated, that NATO is divided". REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
an hour ago
- Straits Times
Russia must not let economy slip into recession, says Putin, after minister issues warning
Participants watch Russian President Vladimir Putin's speech on a TV screen at the 28th Saint Petersburg International Economic Forum on June 20. PHOTO: EPA-EFE Russia must not let economy slip into recession, says Putin, after minister issues warning ST PETERSBURG, Russia - Russia's economy must under no circumstances slide into recession, President Vladimir Putin told an economic forum on June 20, in a clear instruction to assembled government ministers and central bankers. The Bank of Russia hiked its key interest rate to the highest level since the early 2000s in October, seeking to curb stubbornly high inflation, before cutting it by one percentage point to 20 per cent earlier this month. The Kremlin has said this easing did not go far enough, as the economy threatens to cool too quickly after running hot for two years thanks largely to huge increases in defence spending on the war in Ukraine. 'Our most important task is to ensure the economy's transition to a balanced growth trajectory,' Mr Putin said, in a keynote speech at the St Petersburg International Economic Forum. Consumer inflation is running at 9.59 per cent on an annual basis, according to the economy ministry, well above the central bank's 4 per cent target, but has been gradually easing since late April. 'Balanced growth is moderate inflation, low unemployment, and continued positive economic dynamics... At the same time, some specialists and experts point to the risks of stagnation and even recession. This should not be allowed under any circumstances,' Mr Putin said. Economy Minister Maxim Reshetnikov, in a downbeat message to Russia's showcase economic event, said on June 20 that the economy was on the verge of sliding into recession and monetary policy decisions would determine whether it falls into one or not. Pressure on the central bank is mounting. Central Bank Governor Elvira Nabiullina, credited with steering Russia through a serious of crises since being appointed in 2013, has also faced criticism from lawmakers and prominent businessmen, often over high interest rates or rouble volatility. She has remained in post thanks to Mr Putin's personal support. Russian Economic Development Minister Maxim Reshetnikov delivered a downbeat message at Russia's showcase economic event. PHOTO: REUTERS 'It's time to cut the rate and start heating up the economy,' Deputy Prime Minister Alexander Novak said on June 20. Demand for credit is weak, said Mr German Gref, chief executive officer of Russia's largest lender Sberbank, calling for faster rate cuts to incentivise companies to invest. 'It is especially worrying that we, as the largest bank, which finances... almost 60 per cent of all investment projects in the country, have not financed a single new project since the new year,' Mr Gref said on June 20. 'Serious problem' Businesses, complaining for months about high rates stifling investment, have continued to bang the drum for a cut, with Mr Alexey Mordashov, steelmaker Severstal's largest shareholder, warning that certain businesses were downsizing or shutting down. 'We are on the brink of a serious credit servicing the number of bankruptcies is growing,' Mr Mordashov said, warning that more businesses may become disillusioned with high rates and simply choose to hold money on high-interest deposits instead. Steel consumption was down 14 per cent in January-May compared with the same period of 2024, Mr Mordashov said, highlighting how investment activity is down, hurting Russia's long-term development and competitiveness. 'This cooling is a serious problem right now,' Mr Mordashov said. 'And to continue with this (monetary) policy is fraught with the intensification of these negative consequences.' REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
