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October 4, 2022

Isarescu: “Pensions will not be paid from the BNR reserve!”

Wage and pension cuts never to be reversed, says Governor’s adviser Lucian Croitoru.

The governor of the National Bank of Romania (BNR) , Mugur Isarescu voiced his disappointment for the level of economic debates and, especially, for the proposals made by some politicians about using the Central Bank reserves to pay pensions. “(…) Such ideas are a sign of confusion and the failure to understand the fact that a reserve means the possibility to secure the stability of the currency and financial stability, when you no longer have it,” Governor Isarescu explained during a seminar on the SME sector, answering several proposals made by PNL Deputy Ioan Ghise, HotNews.ro reports. Ghise recently declared that cutting pensions and salaries could be avoided if the state took money from the BNR forex reserve. According to Isarescu, the idea only confuses the population, because there is no technical possibility to do so.

The BNR official insisted to explain that, besides confusions, economic debates are characterised by a very dangerous triviality. “More than ever, the Romanian society needs professional debates, and we must struggle to translate them into a more accessible language. We must put an end to the triviality of economic debates. This is extremely dangerous: this situation must stop,” Isarescu said.

The governor also warned that economic and financial experts must get more vocal about the problems of the economy, though this does not increase ratings, in view of a better understanding of the present situation,” (…) “Talking about social problems without taking economic resources into account is misleading,” Isarescu added. The head of the Central Bank also pleaded in favour of improving the quality of economic debates. “We have a big setback: we don’t make rating on TV,” Isarescu explained. The governor also mentioned that the reform must be made rigorously, rather than by exceptions. “Reform should not mean that we make more exceptions, as we must do it as rigorously as we can. Rigor is necessary in order to discipline the society. Simplicity too is a direction, because other directions might create very dangerous arrears and result in a major imbalance that will be corrected with tough measures,” Isarescu warned.

Additionally, Isarescu explained that BNR insists on drawing European funds, which might help in the financial effort of repaying the foreign debt. “I believe we should show more interest to foreign debt, as a topic of discussion. We borrowed this money, but how will we return it? European funds might bring that economic welfare that would help repaying the foreign debt,” Isarescu believes.

Croitoru: Current economic difficulties tackled with collective hypocrisy

General economic rhetoric, state budget and short-term fiscal framework suggest wage and pension cuts will never be reversed, central bank governor’s advisor Lucian Croitoru told the same seminar. ‘Aiding micro-enterprises sound bad, as it means transferring them money from the budget. I was thinking this was a year where we cut salaries and pensions. The measures are deemed as remaining in force until December 31, but the economic rhetoric, the budget and the entire short-term fiscal framework are constructed in such a way that these measures can never be reversed,’ Lucian Croitoru said.

He also touched upon the public sector and especially the subject of people fraudulently retiring from employment at the age of 40 or 42, ‘I we asked Mrs. Andreea Paul Vass (PM’s advisor – our note), we would learn that a minimum of 300,000 of the current pensioners retired fraudulently on medical grounds,’ Croitoru said. In what regards healthcare, Croitoru highlighted the absence of genuine reforms.

In a distinct respect, exceptions in the fiscal area are an invisible cost, as they always raise the level of actual taxation, with the harsher being tax exemptions in agriculture, the BNR official also said according to Mediafax. He also pin-pointed the fact that current economic issues were delicate ones and also addressed with collective hypocrisy. Some of the media, some TV stations most certainly do not seem to be able to hold an impartial debate on recession and what can be done about it. The mass-media fails to fulfil its role as a communicator. This is not to say that the government has been any better as a communicator. The quality of the debate is extremely poor,’ Croitoru said. In his opinion, the Romanian state does not have quality ministers because it cannot afford to pay them properly. ‘The second matter where we show hypocrisy is the pay. They all complain about salaries, yet they all admit to the president, premier’s wages’ being extremely small compared to the responsibility that comes with the job. For this reason we cannot have ministers of the highest quality in the government as long as the system cannot reward them properly. Those who are rich regularly have an agenda running in parallel with the agenda of reforms’, the central bank official added. According to Croitoru, although all politicians recognize it as the solution, what we have in reality is that all budget planning accommodates a derailment of wages and welfare payments exceeding 60 per cent of the budget.

The BNR official also noted that, even during its times of economic growth, the Romanian economy had been subject to massive capital flows.

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