Romanian lawmakers on Tuesday approved a 40% hike in state pensions, dealing a blow to the Liberal minority government’s move to enforce a smaller, but sustainable increase of 14%.
Parliament voted 242 to 147 to endorse the hike. There were 11 abstentions.
The opposition Social Democrats, in power until last October and the biggest party in the legislature, pushed for the hike in pensions from Sept. 1, and a doubling of child benefits last year.
But Prime Minister Ludovic Orban said the country couldn’t afford the hike.
„The irresponsibility of the Social Democrats risks throwing Romania into an economic crisis we’ve scarcely emerged from,” he said.
The move brought warnings of ratings downgrades. Measures to boost social spending ahead of local elections and a parliament poll later this year have raised concern over ballooning deficits with the European Union.
Fitch Ratings said a 14% increase would “reduce the challenge of consolidating public finances compared with the previously budgeted 40% increase.,” predicting that the eventual increase would depend on “political calculations” ahead of elections.
“A large pension hike remains a risk to our baseline fiscal forecasts,” the agency said in August.
Liberal lawmaker Florin Roman said the party would challenge the measure at the Constitutional Court.
Finance Minister Florin Citu accused the Social Democrats of knowing that Romania couldn’t afford the hike, even a year ago when there was economic growth.
Now „a group wants to blow up the country,” he said referring to the effects on the budget.
Mr Orban pleaded with „our grandparents to believe me that 14% is the maximum we can afford. We can’t raise it higher.”
But former Social Democrat Labor Minister Lia Olguța Vasilescu claimed the measure was sustainable and that the Social Democrats have governed well.
The government “prefers that two million Romanians live in poverty,: she said accusing the Liberals of having money that they didn’t want to spend.
Former Prime Minister Calin Popescu Tăriceanu claimed the government had borrowed money and given it to political allies.