The representatives of the international financial institution consider that the quality of the local business environment is rather precarious now, although the country is lucky to belong to the convergence zone.
Romania needs a long-term that gets implemented and must correlate its resources to priorities, the director for Romania of the World Bank (WB), Francois Rantrua said yesterday in a press conference dedicated to unveiling the report ‘The golden growth: Restoring the luster of the European economic model,’ hosted by the National Bank of Romania (BNR), capital.ro reports, quoting Agerpres.
“The report speaks about administrative reform, a reform of the market. This also reflects the situation of Romania. The new government is very interested by growth models, as the report shows,” Rantrua mentioned. He added that WB supports Romania’s development. “A new according with the International Monetary Fund will follow, and the World Bank will sign a new economic memorandum with authorities, to support the economy,” he explained.
The medium and long-term vision necessary in the case of Romania was also evoked, during the same conference, by the WB chief economist for Europe and Central Asia, Indermit Gill. “On short term, Romania succeeded in having tangible results and is among the few countries that had such macroeconomic results. We must be more careful with our growth resources and I am sure that we will have a more direct approach. We want economic increase both on medium and long term, so the government concentrates on several zones: cleaning the sector of enterprises where resources are wasted, the energy sector and the construction of infrastructure (both are not very good signals), investments (privatisation), the agricultural sector, reform in the public administration,” Gill said.
However, he added that the quality of the Romanian business environment is rather precarious now, although the country is lucky to belong to the convergence zone. “The biggest capital flows are in Europe. The new member states of the EU benefited from big capital flows, same as candidate countries. Most of this capital has been correctly used in Romania, but the quality of the business environment is rather precarious now and it must turn towards the vision of EU15 member states,” Gill warned.
According to the WB chief economist, Europe uses large sums for the welfare system, above the average sums spent by other countries. In the same context, Indermit Gill mentioned that Romania has a relatively good pension system, although some adjustments are needed.
Popa, BNR: Managing the crisis is not enough
The periods of economic boom ended brisker than expected and simply managing the crisis is not enough now, as we must also act, the deputy governor of BNR, Cristian Popa said during the presentation of the report released by WB. Popa appreciated that the report of the international financial institution makes a very efficient analysis of the fact that the deficits represent the strongest threats for the countries of Central and Eastern Europe and considers that they “need to provide productiveness over long term,” for economic recovery across the region.
Daianu: Romania’s economic growth model must be rethought
Attending the event, economy professor Daniel Daianu said that Romania must rethink its economic growth model and be careful with how it spends its cash. “We know that there is much inefficiency in the Romanian economy; our problem is how to rethink the reforms, especially in the case of state companies. Another problem is that Romania is a weak state with a numerous government. Romania does not have a small government,” Daianu stated.
The ‘Golden growth’ report made by Indermit Gill, the WB chief economist for Europe and Central Asia, approaches the long-term growth perspective in Europe with emphasis on the evolutions of the last two decades and tries to identify what should be done to secure prosperity for the next 20 years. The document proposes adjustments necessary for improving commerce and the activity of the finance sector, for encouraging enterprises and innovation in that part of Europe that started experiencing a slowdown of performance and troubles in the functioning of the labour market and governments. According to the report, the proposed changes might restart the convergence engine, by making European companies more competitive and allowing Europeans to reach higher living standards.