Paper/Speech Details of Conference Program for the 19th NISPAcee Annual Conference Program Overview Fiscal Policy Author(s) Ioana Teodora Bitoiu National School of Political Studies and Public Administration BUCURESTI Romania Cocosatu Madalina, Title Searching for buoy in the deep fiscal waters File Paper files are available only for conference participants, please login first. Presenter Abstract This paper is a continuation of the work in progress we have presented at EGPA 2010 and its final part, along with the general findings shall be the topic of the third paper at the end of 2011, once the IMF stand-by arrangement between Romania and the IMF comes to an end. The fiscal policy has been long described as a tool to influence the state economic performance, and can be traced back to Keynesian demand-side fiscal policy, or counter-balanced supply-side fiscal policy (Tucker, 2005). As such, considering Romania’s current economic situation, the fiscal strategy defined on medium-term is built around the Maastricht objective of a three per cent deficit for 2012, and in accordance to ensuring the future stability and predictability of the tax system. The paper shall present in brief the measures taken until September 2010, and further make an in-depth analysis of the latest measures, as it pertains to Romania’s Stand-by arrangement with IMF 2009-2011. In the established framework, the manuscript shall emphasize the on-going restrictions of the public expenditures as a necessity for reducing the public deficit together with the gradual rebalancing of the public servants’ remuneration (acknowledged in the Letter of Intent to the IMF, on 9 September 2010). The analyzed measures will include the medium-term fiscal strategy 2011-2013, considered to be an important step in the implementation of the Fiscal Responsibility Law and in reaching the Maastricht targets. The research objectives search to clear up the measures’ coherence in the context of a declining public budget and a negative growth period, when the shrunk public funds need to be properly allocated. Therefore, the answer that our research is looking for should pertain to the following concern: can the government’s actions be considered solutions to the problems raised by the current context? The answers shall aim at both restoring the legal and economic balance, as defined in the working hypothesis. The lax fiscal policy of the expenditures brings about an involuntary fiscal contraction in the event of an economic downturn (Rosen and Gayer, 2010), as it was the case in Romania. Those lack of prudence shall be addressed in our analysis, with specific reference to the already established literature explanations involving the decision-makers trust in the „good days shall be around forever”, which triggers a belief that the expenditures’ expansion can be permanent. Regarding the paper methodology, this study is proceeding via bibliographical research, so that the reasoning behind the paper is clearly underlined as this research is actually triggered by the radical changes made by both legislatures and practitioners as a response to crisis. Further, the manuscript makes use of direct observation and legislative analysis and extensive documentary research of national tax policy and statistics relevant for the timeframe 2009-2010. Further, a comprehensive analysis of several interviews made with top officials of the Romanian Central Bank and the Romanian Government is to be taken into account.
