Romania’s ruling coalition has put on hold the planned rotation of the prime minister position, and the rising social unrest aggravated by insufficient tax revenues might bring an end to the unusual political construct forged by President Klaus Iohannis in 2021. 

Social Democratic Party (PSD) Finance Minister Adrian Caciu dismissed on May 30 two heads of agencies responsible for tax collection, after reportedly being behind the resignation announced earlier by the head of the tax collection agency ANAF, appointed by the National Liberal Party (PNL) — the PSD’s partner in government. 

Announcing his resignation, former ANAF head Lucian Heius argued that the budget for this year targets unrealistic revenues and undervalues expenditures.

The president of the Romanian Customs Authority (AVR), Bogdan-Lari Mihei and the head of the National Agency for Mineral Resources (ANRM) were also dismissed by Caciu.

At the same time, Caciu himself came under fire from lower-rank members of the PNL (though not yet from Prime Minister Nicolae Ciuca) and is expected to soon be replaced by a Liberal appointee: either presidential advisor Cosmin Marinescu or current Minister of Digitalisation Sebastian Burduja. 

The disappointing budget execution on the revenues side is complicating what was supposed to be a rotation of the two ruling parties, under the agreement reached in 2021. 

The €1.8bn (0.6% of GDP) negative deviation from the planned revenues in January-May, likely to reach €4.4bn in the full year, is the effect of poor planning and the necessary corrective measures will generate political costs that each of the two ruling partners are avoiding.

Caciu claimed that the deviation in January-May was actually wider than announced by Heius – a claim quickly rejected by Heius himself. Caciu also stressed that the revenues should be brought in line with the plan — something that is totally unrealistic but is aimed at putting pressure on his Liberal successor.

Teachers in Romania are already in the second week of their strike. They rejected the latest offer made by the government on May 30 saying that they accept nothing but a permanent increase of wages inked in a document such as a government decree.

This is likely to ignite broader social unrest, possibly including strikes, after inflation eroded the income of large parts of the public and private sectors.

On average, wages increased in line with the inflation – but some categories (such as teachers) are significantly lagging behind due to their weak bargaining power.

Other categories of employees may request rights granted by laws already passed but suspended because of the lack of budget, such as railway workers and even doctors that insist on fair compensation for overtime. 

At the same time, police officers have warned against the government curtailing their benefits in terms of early retirement age and special pensions. Although they cannot officially organise strikes, their associations warned of protest actions of a magnitude that might block the functioning of the system.

The ruling coalition has reportedly agreed on reforming the special pension system by increasing the retirement age for ‘military’ personnel, which includes police and intelligence services as well. The ruling coalition’s plan is to curtail magistrates’ benefits as well, but the bill was not yet endorsed by the lawmakers.