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Bucharest
November 17, 2019
EDITORIAL

Crisis extravaganzas

The citizen seems to understand ever less of the crisis going on around him. Every day we hear the opinions of experts, analysts, commentators, investors, politicians, ministers a.s.o. Did the worse really pass of the economic and financial crisis we are all enduring nowadays, or did we just have an appetizer so far?


As we can see, things are murky everywhere in the world. Former winners of the Nobel Prize for economy issue contradictory statements, some believing that the world is on the right track, while others are ready to swear economic collapse is just around the corner. George Soros himself goes live to say that the worst is over. Other investors claim the contrary.


If uncertainty is the name of the global game, Romania is the country of extravagant measures and ideas – and this is a nice way of saying we are just fumbling.


There is inability to correctly analyze how things are going on. As we are getting close to the end of the second quarter of 2009, the Romanian economy isn’t looking good at all. It is choking with a 4-6 pc decline, though figures are uncertain until the National Statistics Institute will release the real indicators. What are Romanian politicians doing in this context?


The first thing they do is deepen the feeling of insecurity. Instead of moderate – if not optimistic – statements, the president and the minister of finance both tell us we are in full recession and economic contraction this year might be more drastic than the present estimations, which give a figure of 4 pc of the GDP.


The second thing we can see is that we have no anti-crisis program. The measures proposed by Premier Emil Boc are far from yielding results and, for the time being, the ruling coalition doesn’t look capable to offer the correct alternative in the fight against the “dragon” called crisis.


Then again, we can see the Executive taking measures that are by no means stimulants to the economy. It enforced the lump tax, which chokes, or plainly kills small private firms, and not only them. In a separate move, it reduced the number of taxes, upon pressure by the business environment. The Government scrapped 42 parafiscal taxes and reduced or merged another 142. According to PM Boc, taxpayers would thus benefit from a parafiscal credit of EUR 75 M. However, the Executive did not base its decision upon the public interest, but on a different kind of calculation – a more pragmatic one: the taxes that got eliminated were precisely those whose administration costs exceeded the incomes they brought to the state.


The Executive’s intention not to renounce incomes is also demonstrated by the examples of scrapped taxes it presented to the public: the tax of authorization for the inspection in the construction sector (RON 150), the tax for the evaluation of the technical documentation of medical equipment (EUR 30-210 per equipment item), the sanitary license tax for new substances and products (RON 10), the tax for issuing licenses to the operators that take electricity measurements (RON 1,000-2,500). These taxes have a very limited area of enforcement. On the other hand wide-scale taxes were only merged, instead of being eliminated altogether. Things are still unclear, but certain experts think that, all in all, the total level of taxation is increasing.


Extravagant are also the so-called economic stimulation measures. Because we are in a pre-electoral period, there is much talk about the ‘First house’ program, because such ideas are looking good to the public. But if we look carefully, the First House program is a loser in both respects: social and economic. In social terms, it does not address the youth, deprived of financial resources. In spite of the expected low interests, the installment level does not allow a young couple, with under-average salaries, to take a credit it will be able to repay in time. In economic terms, the program will somehow stir things on the crediting market, but it can by no means support a real economic recovery.


What is left to say about the thermal insulation of residential buildings? How could anyone insulate whole districts, built some 20 or 30 years ago? Two weeks ago, a bizarre incident happened in Colentina district, when big chunks of plaster fell off the wall of a block of apartments. Are such buildings worth a thermal insulation process? It would make more sense – and would probably be more efficient – to build new blocks from scratch.


The “state of crisis” might give ministers and state officials an extra stimulus to find ingenious solutions. But, in most cases, what measures we see are by no means ingenious. For instance, why do we need a ministry of Sports in moments like these? Sport needs talent, dedication, financing and management. What can a ministry offer here, apart from spending big bucks from the budget?


Let’s take another minister, Ms. Ecaterina Andronescu, the minister of Education. Every now and then, she has ideas she thinks are revolutionary, but end up in the ridicule. First she came with the idea of reducing the sports classes in the school curriculum, hoping this – from all things – would have eased up the very crowded curriculum. Of late, the minister came with another shocking proposal, aimed at solving the problems related to salary levels and cutting short the disputes about university professors being paid too much in comparison to school teachers. Ms. Andronescu’s idea was to propose upping the retirement age of university professors from 65 to 70 years!


All these are solutions at hand for us… After we get rid of the crisis, we can afford smiling at the politicians’ extravaganzas. However, for the time being, we are trying hard not to fall into the darkest despair.

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