A few minutes after the vote designated him as Romania’s next president, Nicușor Dan mentioned the budget deficit as his main concern. In the election campaign, he ruled out tax hikes and outlined four categories of measures designed to rebalance public finances without further damaging the real economy.

“The country’s private economy is significantly more stable compared to the 2008-2009 crisis and economic recovery can be achieved through structural adjustments to the state budget,” said candidate Nicușor Dan. In his opinion, the country’s budgetary consolidation should be realised mainly on the basis of spending cuts and less on revenue growth through an increase in the tax burden. “There will be painful but necessary cuts. It is a decision that we have to take now, so as not to end up in a situation where the IMF comes and cuts in our place,” warned Dan, recalling the historical episodes in which Romania had to accept drastic external conditionalities. According to the president-elect, spending discipline is preferable to a “spiral of taxation” that would damage economic initiative – even if the cuts will be, in his words, “painful, but compulsory”.

He outlined four courses of action to reduce the deficit: two focussing on revenue growth and two on expenditure adjustment. On the revenue side, he emphasised the need to tackle high tax evasion, a long-standing World Bank recommendation that has so far been ignored, and to attract EU funds more effectively, which are delayed mainly by red tape. On the spending side, he prioritised cutting public spending in general and reforming state-owned companies, many of which suffer from managerial inefficiency.

“We have to regain the confidence of the financial markets, of the private market. We must have a predictability range so that an investor who will come to know that the taxes he pays now will be the same in a year or two years from now”, Nicușor Dan emphasised during the electoral debates.

It remains to be seen, in the very short term, what will be the reactions of the financial markets, more precisely to what extent the pressures on the depreciation of the national currency and the upward trend in interest rates at which the Romanian state borrows will be reduced. Equally important, we will soon see whether the new direction taken by the President-elect will convince the European Commission to grant Romania a new period of grace in relation to the breach of European rules on fiscal discipline, but also of reform commitments in multiple areas.

At the same time, incoming President Nicușor Dan will have to work fast on the formation of a new government, the country’s security situation and the mitigation of divergences within Romanian society. In his first speech after the announcement of the exit-poll results, Nicușor Dan emphasised that “there is a community that lost today’s elections, a community that is rightly outraged by the way politics has been conducted in Romania so far and a community that is so outraged that it believes that the solution for Romania at this moment is revolution”.

“It is our obligation to convince these people that the solution for Romanian society is the reform of justice and the reform of the administration in this country so that Romania can move forward. It is the task of all of us to fight for one Romania, not for two Romanias. We are currently living in a moment of hope”, Nicușor Dan added.