Covering Risks in the Public Administration - an In-Depth Analysis of the Regulatory Changes in Romania

Author:Madalina Cocosatu, Ioana Teodora Dinu
European Integration -
Covering Risks in the Pu
National School of Political St
National School of Political St
The paper aims at ana
of the public administration unde
more importantly, social crisis
stakeholders. The decision-
incoherence and instability due t
acts by the Romanian Constitu
coherence in the context of a de
funds need to be properly alloca
the following concern: can the g
current context? The answers sh
working hypothesis. The lax fisc
the event of an economic downt
explanations involving the decisi
belief that the expenditures’ exp
proceeding via bibliographical r
research is actually triggered by
to crisis. Further, the manuscri
documentary research of nationa
comprehensive anal
ysis of sever
Romanian Government is to be ta
regulations; risks; re
1 Introduction
The frequent leg
islative changes
their challenge to the Constitut
organizational and functional ins
local level.
es and Perspectives
Public Administration
– an In-
Depth A
Regulatory Changes in Romania
ădălina Cocoşatu
, Ioana Teodora Dinu
l Studies and Public Administration,
Faculty of Publ
l Studies and Public Administration, Faculty of Publ
nalyzing in a trans
disciplinary manner the institutional and fu
nder crisis. The current analysis looks in depth of the financia
sis in relation
to the reforms imposed by both the inter
akers have not taken into account the risk factors, trigg
e to the challenging and approval as non
constitutional of man
titutional Court.
The research objectives
search to clear u
declining publi c budget and a negative growth period, when
. Therefore, the answer that our research is looking for
e government’s actions be considered solutions to the proble
shall aim at both restoring the legal and econ
omic balance,
iscal policy of the expenditures brings about an involuntary fis
nturn (Rosen and Gayer, 2010), as it was the case in Roman
in our analysis, with specific reference to the already esta
makers trust in the „good days shall be around forever”
xpansion can be
permanent. Regarding the
paper methodol
l research, so that the reasoning behind the paper is clearly u
by the radical changes made by both legislatures and prac
cript makes use of direct observation and legislative analys
onal tax policy and statistics relevant for the timeframe 2009
veral interviews made with top officials of the Romanian Cen
e taken into account.
resource allocation; decissions of Constitutional Court
es as well as the lack of coherence of the normativ
tutional Court and the provisions’ ruling as unc
instability, both on the central public ad
th Analysis of the
ublic Administration,
ublic Administration,
d functional changes
cial, economic, and,
ternal and external
iggering legislative
any su
ch normative
r up the measures’
en the sh runk public
or should pertain to
blems raised by the
e, as defined in the
fiscal contraction in
ania. Those lack of
stablished literature
er”, which triggers a
, this study is
y underlined as this
tioners as a response
lysis and extensive
-2010. Further, a
Central Bank and the
ative acts generated by
nconstitutional creates
ration level and on the
Performance and Risks in the European Economy
In our analysis, we take into account the legislative changes made due to both Romania’s international
agreements and to the observance of the principle of ensuring the balance between the social dynamics
and the national legislative framework.
Situation Analysis
In functional terms, Romania’s economy is a critical entity because its components (blocks) have
poorly interacted, have not interacted, or have had contrary trends.
The neo-monetary philosophy of the Washington Consensus, a major political option at the beginning
of the transition, stressed out the declutching of the symbolic economy from the real one: the measures
of macroeconomic pegging, a priority of the political decision, left the real sector to act on its own.
The domestic production of goods not only rapidly dropped, but it was affected by the dissolution of
some sectors or branches, the disappearance of products and loss of sale markets.
From the very first years of the economic transition, the economy has non-functionally layered in the
following manner: the legal inertial layer of the underground economy, the layer of the substitute
economy (arrears) and the layer of the subsistence economy.
The Romanian economy knows all the three forms of inefficiency: allocative, productive and
The feature of the weak structuring of the economy is set by adaptive expectations and is resistant to
the long term objectives, relatively high inflation, decapitalisation due to the monetary policies, the
feud around the budgets, the lack of predictability of the evolutions as a consequence of the legislative
and institutional chaos, the inconsistencies in defining the property right, the political control of public
economy etc.
The economic crisis, a world phenomenon that is structurally affecting the Romanian economy,
enforces the adoption of some exceptional measures that, through the efficiency and promptness of
their application, would lead to a reduction of its effects and would create the premises for the national
economy re-launch. Also, these measures must ensure the fulfilment of certain obligations resulted
from the Memorandum of Agreement concluded between the Romanian Government and the
European Commission and the Stand-By Arrangement concluded between Romanian and the
International Monetary Fund.
Growth perspective remains uncertain. The economic situation has become worse since the last
IMF evaluation in January 2010 and the team has reviewed the GDP growth prognosis from +0.8
percent to -0.5 percent. Nevertheless, the high frequency indicators sugest that the recession is moving
towards the end and the expectations are aiming at a positive growth for the remained period of time.
The unsatisfactory performance in the 1
quarter of 2010 required the adoption of
supplementary adjustment measures. The fiscal deficit target was not reached for a small margin as
well as the ceiling of the internal overdue debts. Without a supplementary adjustment the team
estimated an incresed deficit of 9.1 percent of GDP until the end of the year, as opposed to the 5.9
percent target. In order to take into account the cyclical deterioration of the economy, the IMF team
and the national authorities have agreed to reviewing the deficit target for the Stand-By Arrangement
to 6.8 percent of GDP, and the national authorities have chosen a measures’ package that includes the
expenditures’ reduction with approximately 2 percent of GDP in order to reach the new deficit target.

To continue reading