HOW THE GOVERNMENT CALCULATES OUR POVERTY Austerity measures invalidate the economic forecasts

• Ion Ghizdeanu, National Prognosis Commission: "We will revise our prognosis for 2010"

• Bogdan Hossu: "The poverty rate will increase substantially compared to last year"

• The poverty threshold: 500 lei

The austerity measures that our authorities announced in order to cut budget spending have messed up the estimates of the National Prognosis Commission (CNP) concerning the poverty rate in Romania.

According to an official report that we got hold of, the Commission had predicted a poverty rate of 18.3% for 2010. Meaning, out of the 21.4 million citizens, 3.92 million would have officially enter the qualified for poverty. The poverty threshold is 60% below the median of available income per equivalent adult. For instance in 2008, the poverty threshold was 459.33 lei.

The National Prognosis Commission for 2010 estimated a decrease in the poverty rate of 0.2%, an assumption which is surprising, considering that the crisis is worsening and the exit was certain only if one listened to politicians" statements.

In other words, around 50,000 citizens would have been removed from this category, and their living standard would have theoretically improved compared to last year.

According to our information, the government drew up its budgetary and fiscal strategy for the 2011-2013 period around this estimate, which is based on data from the National Statistics Institute. The strategy was discussed yesterday in a government meeting.

The forecasts are now being invalidated due to the incompetence of the Executive, which changed its tune abruptly: at first, it strongly assured us, including in March, that pensions and wages would remain unchanged, and then in May it announced that it would cut pensions and social security by 15% and 25% off the wages of public sector workers.

"We are already working on revising our prognosis on the poverty rate in 2010", Ion Ghizdeanu, the chairman of the National Prognosis Commission said yesterday. When asked how the forecast would be revised, Ion Ghizdeanu said that it is possible that the poverty rate for the current year would be "somewhere" around 18.5%, similar to 2009.

But according to professional associations and unions, an increase of the poverty rate of just 0.2%, like in 2009, is unrealistic. According to them, the number of people living below the poverty line will increase steeply this year.

Cristian Pârvan, the secretary general of the Association of Romanian Business People (AOAR) considers the prognosis unrealistic: "The prognosis doesn"t match reality. It"s enough to factor in the 15% cut in social aid, and according to statistics, this accounts for approximately 24% of a family"s budget, and we can as a result tell that we are going to have a much higher poverty rate than we had in 2009".

Bogdan Hossu, the leader of the National Union Confederation "Cartel ALFA" considers that this year, the poverty rate will increase substantially, by several percentage points, far exceeding the 0.2% revised estimate of the National Prognosis Commission.

Bogdan Hossu said that this can hundreds of thousands of public sector workers could fall below the poverty threshold, after the announced wage cuts: "On top of all this, if we take into account the issue of meal tickets, which may be see a 16% cut or no longer be awarded at all, or the situation of families which are receiving less money from their relatives which left abroad, it is to be expected that the poverty rate will increase substantially".

Ion Popescu, the chairman of the National Union Confederation "Meridian" considers that the poverty rate will be much higher in Romania and added: "I don"t trust these optimistic predictions".

What is interesting is the fact that in the aforementioned official document, the National Prognosis Commission also expects the country"s population to decrease by 35,000 people compared to 2009.

Of course, we can"t know for sure how many of us there will be at the end of the year, but one thing"s for sure, we will be increasingly fewer.

And poorer.