Event

A new technocratic cabinet was sworn in last month after PM Ponta resigned in the aftermath of a nightclub fire in Bucharest in which 60 people died and the mass protests that followed. The new cabinet, which includes experts from international institutions, diplomats and leaders from the private sector and civil society, will be led by Dacian Cioloș, former EU agriculture commissioner, and will have a short one-year mandate, up to the end of next year’s general elections. It is expected to receive broad parliamentary support.

Impact on country risk

The new cabinet’s programme is resolutely focused on the improvement of the business environment and the tackling of corruption. Plans will be made for the privatisation of public companies, notably through the implementation of a single administration for public companies. Increasing the absorption of EU funds is another priority for the cabinet, through enhanced management at national and regional level, which is likely to lead to increased investments in infrastructure, sustainable technologies, ICT and HR, and for which national or foreign co-funding will be sought. Fiscal stability will also be privileged, with the outgoing government’s decisions on tax cuts likely to be maintained, although the measures could increase the fiscal deficit above EU limits. However, the government’s short period in office raises doubts about its capacity to properly implement structural changes. Also, a new precautionary agreement with the IMF is unlikely in the meantime as the IMF does not usually settle deals with interim cabinets. Analyst: Florence Thiéry, f.thiery@credendogroup.com