Romanian Social Democrat Leader Liviu Dragnea Unveils Budget Meeting NATO Commitments on Defence While Delivering More to Citizens

BUCHAREST, Romania, December 8, 2016 /PRNewswire/ --

Liviu Dragnea, leader of the Social Democratic Party of Romania (PSD), today outlined a series of budget proposals designed to raise revenues but leave more in the pockets of ordinary Romanians. The budget unveiled by Mr. Dragnea puts into concrete terms the electoral program that has spearheaded the PSD campaign of the past several months, focusing on a robust set of pro-growth fiscal measures and branded under the slogan "Dare to Believe in Romania."

Mr. Dragnea also announced a major increase in defence spending, in keeping with commitments by Nato members to spend at least 2% of GDP on military preparedness, to join just five other member states currently meeting that target. This would be a significant policy change for Romania, representing a 40% increase in expenditure.

Despite continued economic growth arising from the pre-2016 PSD government's programs, national revenues under the current caretaker government have actually declined, the first time this has occurred since 2009. In recent weeks, in the run-up to parliamentary elections this Sunday (Dec. 11), Mr. Dragnea has made a series of announcements intended to convert the country's growth into genuine benefits for Romanian citizens.

"This budget shows with clear figures that our proposals will put the economic growth into people's pockets, through higher wages and pensions as well as investments in education, health and infrastructure, so that Romanians can enjoy a better life as part of the growing middle class," Mr. Dragnea told a Bucharest press conference today.

He said the next PSD government's priorities would be higher incomes for Romanians, investments in education, health and infrastructure and lower taxes.

The plan anticipates budgetary revenues of 254 billion lei (approximately EUR 56.5 billion at current rates), an increase of about 10% from the current year. Main sources would be VAT, excise taxes, other service charges and income tax revenues. In addition, funds from the European Union are forecast to increase to 21 billion lei in 2017. The PSD has been highly critical of the current government's failures to draw down funds from the EU having failed to meet administrative requirements.

The plan released today proposes expenditures of 276 billion lei, including:

• A 20% average rise in wages for the public employees.
• An increase in pensions of 14.7%, with the minimum pension rising to 520 lei/month from 400 lei.
• A 6.8-billion lei increase in public investment (local development, modernization and construction of medical facilities, modernization of schools, infrastructure, etc).

Mr. Dragnea proposed budget cuts for the ministries of finance, energy and communications, a 20.9% cut in the budget of the Senate and 17.9% cut in the budget of the Chamber of Deputies.

"Our priorities will be to increase spending on health, education, wages, pensions, agriculture and defense while cutting wasteful spending in Parliament administration and the government ministries," he said.

By setting defence spending at 2% of GDP, Romania will be joining the US, Greece, Poland, Estonia and the UK as the only NATO members currently meeting or exceeding member countries' commitments, agreed to at NATO's 2014 summit in Wales. "As a strategically located state, we have a responsibility to meet our obligations to our defence partners and to invest in our own security," Mr. Dragnea said.

In several pre-election announcements, Mr. Dragnea has already announced the main elements of the PSD economic plan. These include a major investment program, dramatic tax changes, steps to attract desperately needed medical professional back to Romania and a program to give bootstrap support for new businesses.

A national reindustrialization program is designed ultimately to generate 45,000 new jobs. Linchpin of the plan is a EUR 10 billion (45 billion Romanian Leu) state investment fund, the Sovereign Fund for Development and Investment or SFDI (Fondul Suveran de Dezvoltare si Investitii, or FSDI), which is to be created from the assets owned by the state in 200 companies. The fund is expected to generate revenues of over 50 billion leu in the next four years, as dividends from those companies are reinvested, and private investments are attracted.

About the Social Democratic Party of Romania

The PSD, in Romanian Partidul Social Democrat, was originally formed in 1992 as a party of the center-left and is currently the largest grouping in both lower and upper houses of the nation's parliament, while also controlling more than half of the mayoralties and over 65% of local and county councils, including the capital of Bucharest. The PSD paved the way for Romania's historic accession process into the EU in 2007, and today holds 16 of the country's 32 MEPs. Its 2012-15 government was considered one of Romania's best, leading the country's emergence from the economic crisis and achieving rapid growth, together with a sharp increase of people's living standards. Liviu Dragnea, the PSD's current president, was elected party leader in 2015 and has since led a series of reforms that have positioned the PSD to form Romania's next government. Mr. Dragnea is a former Deputy Prime Minister and Minister for Regional Development.

For further information: Steluta Negoita, +40 730 650 545, presa@psd.ro in Bucharest or Zhenya Harrison, +44 (0)20 3397 2825 or zhenya.harrison@belgravestrategic.com in London.