According to the central bank Governor education, as well as healthcare, are a major source in securing the human capital that is so important in the modern economy.
It will be better for Romania’s economic growth to be 4 per cent a year if this is its potential, instead of 7 per cent, Governor of the National Bank of Romania (BNR) Mugur Isarescu told Wednesday in the 11th edition of the event ‘Mugur Isarescu and his guests.’ The theme chosen by Isarescu for this year was Romania’s economic outlook.
‘I hope we will learn once and forever that if we speed up economic growth beyond a sustainable level in pre-election times, we only speed up its decline in the post-election ones. Romania should want a long development cycle with as few declines as possible. (…) Concomitantly with such type of economic growth I believe we have to finalise Romania’s infrastructures. Remember, this is not physical infrastructure I am talking about, such as transport infrastructure, by the healthcare and education ones,’ said Isarescu.
He added that education, as well as healthcare, is a major source in securing the human capital that is so important in the modern economy.
On the other hand, according to Isarescu, the lower ratio of workers per retiree will represent a major imbalance in the next 10-20 years.
‘Without a long term solution term, like the increase in the number of contributors in general and especially of contributors to social budgets, the other goal, of balanced economic growth, can not be achieved. We are in a situation where almost all government deficit in Romania comes from the pension account, which is an extremely important fact to consider. While comparing the current situation with the past, I believe that the word sustainable is essential, on condition that we are taking into consideration not only short-term solutions, but economic growth in the long run,’ said Isarescu. According to him, that it will be a very good calibration of policies to resources.
According to statistics recently published by the Ministry of Labour, Family, Social Protection and the Elderly, the total number of pensioners stood at 5.258 million at the end of March 2013, down by 92,550 persons compared with the same interval in 2012. Given the number of employees, 4.3605 million people at the end of March 2013, according to the National Institute of Statistics, there were 1.21 retirees per worker, compared to 1.23 retirees per worker at the end of last year. Of the total, 88.98 percent of the retirees were entitled to state social security (4,678,750 persons), while 11.02 percent were former farmers (579,220 persons).
According to BNR Deputy Governor Cristian Popa, Romania continues to have a low labour participation rate, while a long-term economic growth can exist without necessarily stressing activity in rural areas. At the same time, he claims Romania cannot be an exception to the continental model in which the biggest part of the intermediation activity consists of insuring credit institutions.
Predictable financial flow to win credibility
The State must have at its disposal a predictable financial flow to win credibility in front of investors, BNR First Deputy Governor Florin Georgescu told in the same conference.
‘The economic growth is determined by the result of a better combination between a set of policies, on the one hand, and the private initiative, on the other hand. The State must efficiently manage the stakes in the state-owned companies it still has and the goods and services of a physical and human nature. The State must support the entrepreneurship actions by diversifying the state-aid schemes. These budget financial instruments are capable to stimulate economic growth,’ Georgescu said.
According to the BNR official, the Romanian State should have in view three main directions, among which the most important being the entrepreneurship support and the asset management.
In his turn, Daniel Daianu, First Vice President of the Financial Supervisory Authority (ASF), stated that joining the EuroArea represents a nightmare today in the absence of adjustment instruments and a modicum of competitiveness, the risk being of dying while holding the Euro. According to the economist, the banks are currently not capitalized, many business models are collapsing and Romania has a “broken” financial intermediation system.