The Social Democratic Party (PSD) has called on its governing partners to abandon what it described as a 'simplistic' austerity policy and to support the introduction of structural reforms that take into account the country's social and economic realities.
The Social Democrats said they do not support across-the-board cuts in staff expenditure, but rather the introduction of progressive taxation, with reduced rates for low-income earners.
'An alternative to no-exceptions' spending cuts is the introduction of progressive taxation, with lower tax rates for citizens on low incomes. Such a structural reform, supported by the European Commission, would balance purchasing power across social categories and bring additional revenue to the state budget without fuelling inflation or affecting national economic growth,' PSD said in a press release issued on Thursday.
According to the party, reducing budget expenditure is necessary, but the Government must take into account the specific characteristics of different sectors.
'Cutting public sector wages indiscriminately, with a blunt instrument, is not reform. PSD will not support such an approach, which could cause serious blockages in critical areas of the public system. (...) The indiscriminate application of a no exceptions' ideology across the entire healthcare system could severely affect the functioning of Romania's public hospitals, with particularly serious consequences for citizens' lives and health,' the press release said.
The Social Democrats warned that across-the-board staff cuts could also lead to the loss of European funds earmarked strictly for technical assistance in EU-funded investment projects.
'Last but not least, imposing such reductions on institutions or ministries that have already undergone extensive reorganisation in recent months would leave them unable to fulfill their core responsibilities in the fields they manage,' PSD added.
The party cited the latest data from the National Institute of Statistics (INS) and Eurostat, according to which Romania is the 'only' EU member state where employees are 'losing massively' in terms of purchasing power. It also pointed to what it described as the sharpest drop in consumption in the past 15 years, bringing the Romanian economy 'to the brink of recession'.
'PSD has warned that an increase in VAT and excise duties would lead to higher inflation and lower consumption, with negative effects on economic growth and state budget revenues,' the press release further stated.
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