Economic credos of presidential candidates

30 nov 2009 Ziarul Financiar

Beyond the noise and the smoke screen that are dampening major topics, Sunday's elections will lead to major changes in the political landscape, regardless of who the winner is, either Mircea Geoana or Traian Basescu. What can we expect, economically speaking, in either of the cases? Because we will not only have a new president, but also a new government. What we rightly guess is that if Geoana wins, the Government will be formed around PSD (Social Democratic Party), probably helped by PNL (National Liberal Party) and UDMR (Democratic Alliance of Hungarians in Romania). If Basescu wins, we can rightly assume he will do everything possible to build a government around PD-L (Liberal-Democratic Party).

ZF did its research and besides collateral issues such as small films and shorthand minutes, presents the economic credo of the candidates that might leave its mark on the operation of the future government.

Traian Basescu

0. Priority zero

This is, as far as Traian Basescu is concerned, the restructuring of public spending, the creation of a medium-term spending framework, adopting a multiannual budget planning and usage methodology, consolidating public finances and revising the state aid granting rules - these are the urgent measures revealed by Basescu programme.

1. Flat tax

The 16% flat tax must be kept. If deemed extremely necessary, the VAT could be raised, but only if there is no other solution. He is in favour of a tax exemption for reinvested profit, as he has repeatedly stated.

2. Lump-sum tax

Even though criticised, the lump-sum tax was a good measure, because it eliminated part of tax evasion, Basescu has repeatedly said.

3. Agreement with the IMF

The agreement with the IMF must be kept, and the obligations arising from the signing of the loan with the international financial institutions have to be met as they are. It is spending that needs to be cut, Basescu said during his public outings.

4. Exchange rate

The current 4.2-4.3 RON/EUR exchange rate is optimal, it does not help much but it does not impoverish the people too much either, Basescu has said.

5. National energy company

He wants two national energy companies created to bring together electricity producers that would become major players on the European market, as he has publicly stated.

6. Stock Exchange

PD-L, the party that backs Basescu, devised a bill that allows raising the stake cap in SIFs from 1% to 5%, which is to be debated by the Chamber of Deputies.

7 . Real estate sector

A PD-L government will work on continuing the "First Home" scheme in 2010, considering banks still have money for it, public statements of the leaders of the party reveal.

8. Agriculture

The number of people working in agriculture has to be reduced fast. We will have 8-10% of the employed people working in agriculture in the next ten to fifteen years, compared with 30% as we have now. A lot of support is needed for SMEs in agriculture and tourism. A great effort is needed to urbanise villages, Basescu's programme reveals.

9. Healthcare

Hospital management needs to be improved, management needs to become professional, hospitals have to be transferred to the local authorities so as to be put under the public control of communities.

Mircea Geoana

0. Priority zero

In Mircea Geoana's case, this is the exit from the crisis through creation of more secure and well-paid jobs. More responsible spending of public funds, investments in homes for poor families, investments in infrastructure and enactment of the fiscal responsibility law - these are the main priorities included in Geoana's programme.

1. Flat tax

A progressive taxation is needed, but we will not change the flat tax while the crisis is still in progress, we have to introduce a 20% tax on salaries exceeding 3,000 RON per month. Reinvested profit has to be tax exempt, Geoana has said over time.

2. Lump-sum tax

It might be dropped, but additional streams of funding need to be found to replace the lost state revenue, Geoana stated.

3. Agreement with the IMF

Does not question the general terms of the agreement, but does not rule out the possibility of PSD government asking the Fund to change some of the parameters agreed upon, such as state spending, according to some public statements.

4. Exchange rate

An abrupt adjustment of the exchange rate has to be avoided to protect the people, Geoana has said.

5. National energy company

Is for a single state-held energy holding company, so that Romania could become a real champion in the energy business, as he himself said.

6. Stock Exchange

Has publicly advocated suspending the tax on the profit made from sale of shares in 2010, too, in order to encourage investments on the Stock Exchange, a step also backed by PNL.

7. Real estate

Is for building 50,000 social housing units, fully equipped and paid for with public funds, according to his programme.

8. Agriculture

Investments in agricultural product processing centres need to be encouraged, as do trades specific to the rural environment. Young people need to be encouraged to stay in rural areas and open modern farms. The Romanian village has to be brought out of isolation and the gap that separates it from the city has to be narrowed, the candidate's programme reveals.

9. Healthcare

Insurance for every family, adequate medical care, modern hospitals and affordable medicines for vulnerable people. A national healthcare park needs to be created, as stipulated in Geoana's programme.