Romanian President Klaus Iohannis signed a decree on the appointment of Dan Vilceanu as the country’s new finance minister on August 18. 

Vilceanu, an economist and the president of the Gorj branch of the senior ruling National Liberal Party (PNL), is a close associate of Prime Minister Florin Citu, who is currently in a power struggle with PNL leader Ludovic Orban for control of the party. 

Citu announced on August 18 that Vilceanu had gained an overwhelming majority in the PNL’s National Political Bureau. 

In July, Citu dismissed Alexandru Nazare as the head of the finance ministry, saying that his ministry lagged on a large number of projects, including some essential for the absorption of European funds and for fighting tax evasion.

Nazare denied any wrongdoing or underperformance at his ministry, and was sacked after he refused to resign. 

The former minister’s sacking added to tensions within the PNL, where Citu will face the party’s current leader Ludovic Orban in the leadership election next month. 

Orban objected strongly to the move, saying he had not approved the dismissal and furthermore that Citu failed to get the approval of the ruling coalition’s leading body. 

Instead of immediately appointing a replacement for Nazare, Citu personally took control of the finance ministry for 45 days. He said he planned to screen the budget execution in detail, carry out the first budget revision and possibly sketch a medium-term fiscal consolidation strategy expected by the European Commission, rating agencies and investors.

On August 18, the statistics office announced that Romania’s seasonally-adjusted GDP increased by 1.8% q/q in Q2 after the 2.5% q/q advance in Q1, according to the flash estimate released by the statistics office on August 17. The annual growth rate spiked at 13% y/y, an effect of the lockdown that crippled the economy in the second quarter last year. However, the growth was slower compared to consensus expectations for growth rates of around 2% q/q and above 14% y/y.

Despite taking over the finance ministry, Citu has not yet announced plans to revise downward the 7.16% deficit target set under much harsher economic conditions at the beginning of the year.

The National Bank of Romania (BNR) said earlier this month that it had it revised upward the inflation outlook over the next two years, but it still refrained from joining the interest rate normalisation trend. It cited “elevated uncertainty” including over the budget, saying it needs more clarity from the government so as to be able to coordinate rate hikes with the fiscal consolidation path that the government is expected to pursue. 

Vilceanu was a former youth member of the PNL’s main rival, the centre-left Social Democratic Party (PSD), before switching to the PNL. This gave opposition leader Marcel Ciolacu the chance to quip that his party was a “good nursery” for other parties, but that Vilceanu was not one of its "high-class products”. Ciolacu added that he was glad Citu was no longer personally in charge of the finance ministry.