Romania's Strained Budget Is the Latest Threat to Its Leader

(Bloomberg) -- For Romania’s top politician, the increasingly strained budget is becoming a threat to his leadership.

After generous tax cuts and pay rises for state workers, the deficit has swelled toward European Union limits that, if breached, could trigger penalties. But with the ruling party’s popularity waning, its boss, Liviu Dragnea is trying to keep his spending promises alive by switching some of the government’s other financial commitments onto municipalities.

Local officials gearing up for European Parliament elections aren’t happy.

“Dragnea isn’t the King of Romania or the lord of its budget,” said Bucharest’s mayor Gabriela Firea, who’s a member of his party and has challenged his rule before without managing to usurp him. “We don’t come begging to the government. We’re just asking for what should be rightfully ours. The government is totally inflexible to our demands.”

Days of discussions and new promises from Dragnea this week have failed to satisfy local leaders, alienating some of his former allies. This year’s budget, already three months late, will finally be approved Friday, when the costs to Dragnea will become clear.

Even if the government approves the fiscal plan, parliamentary backing is another story. Five lawmakers quit the Social Democrats last week to join a new party created by ex-Prime Minister Victor Ponta. Dragnea’s majority in the assembly is now at risk.

He may need to make concession to gain the support of the ethnic Hungarian party to secure the needed votes to pass the budget. Prime Minister Viorica Dancila suggested the government may amend a controversial emergency decree introducing a so-called “greed tax” after widespread criticism, that’s also coming from the ethnic Hungarian party and the junior coalition partner, ALDE.

To contact the reporters on this story: Andra Timu in Bucharest at atimu@bloomberg.net;Irina Vilcu in Bucharest at isavu@bloomberg.net

To contact the editors responsible for this story: Andrea Dudik at adudik@bloomberg.net, Michael Winfrey

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