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

• Author: Madalina Cocosatu, Ioana Teodora Dinu
• Pages: 422-439

European Integration -

Realities

422

Covering Risks in the Pu

Reg

M

ădă

1

National School of Political St

2

National School of Political St

Abstract:

The paper aims at ana

of the public administration unde

more importantly, social crisis

stakeholders. The decision-

mak

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

prudence

shall be addressed in

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

Keywords:

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

1

, Ioana Teodora Dinu

2

l Studies and Public Administration,

Faculty of Publ

madacocosatu@yahoo.com

l Studies and Public Administration, Faculty of Publ

tdinu@snspa.ro

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

cated

. 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

cision

-

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

tition

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

ministrati

2011

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

dology

, this study is

y underlined as this

tioners as a response

lysis and extensive

09

-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

423

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.

2

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

organisational.

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

st

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.