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Romanias Hopeless Policy

How not to run a country

Oct 22nd 2010, 18:35 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 actuallythought 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

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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 assistanceand 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 a cabinet reshuffle in early September, there is a tranche of disgruntled

PDL members who, with non-affiliated MPs, could swing the balance this time.

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