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August 1, 2021

Central bank governor: Private investments not faring well because of ‘general mayhem’

Private investments are low due to the ongoing “general mayhem” which has a discouraging effect, governor of the National Bank of Romania (BNR) Mugur Isarescu said on Tuesday.

“Investments are not faring well not just because of lackluster public investment, but also because the absorption of European money is not as it should be, and because private investment is faring poorly as well. And if you trigger me, let me tell you something: private investment is not faring well because of this climate of, let’s call it, ‘general mayhem’. Mr. President [Iohannis] was cited with the ‘fiscal and budgetary flip-flopping’. I’d like to live long enough in this office to see the moment when the pursuit in this country will be other than almost permanent scandal-mongering, squabble that discourages investment. So the investment issue is not exclusively related to the low, unsatisfactory level, so to say, of investment as referenced to the economic potential and to what we want to achieve in this country, to budget revenues. It is not related just to this,” Isarescu told the conference for the presentation of the Inflation Report.

He added on the same occasion that the utilization rate of production capacities exceeds the long-term average in most industrial groups, but investments are lagging.

Isarescu also said that the undercapitalization of Romanian companies requires an ample analysis, also because a slowdown in corporate lending is noticeable. The BNR did a survey that revealed one of the causes is that the said companies are not bankable.


“Bank losses mainly due to snagged lending”


A good part of the banks’ losses stem from the fact that they do not give out loans, governor of the National Bank of Romania (BNR) Mugur Isarescu said on Tuesday.

“Well, if you want, I’ll make a brief statement that will probably run all over the media tomorrow. A good part of the banks’ losses arise from their not giving out loans, someone couldn’t be thinking they can live off the fees on payments or currency exchanges alone. They have offices to maintain, salaries, taxes, social security contributions to pay, and so on. They have a lot of expenses. If the banks do not give out loans, their capacity to make profits is small,” Isarescu said.

The central bank governor told the conference for the presentation of the mid-year Report on Inflation that bankable companies account for a tiny share, standing at 12,000 out of a total of 500,000, which is a “very telling” aspect.

Asked about the bad loans sold by banks, Mugur Isarescu replied that, under normal conditions, a bank has no reason to sell cheaper than it could.

“If it’s about offshore companies and so on, they must be promptly penalized. We at the National Bank do not shy away from reporting to the Tax Office or the law enforcement bodies whenever we come upon something – and we did it when necessary,” the BNR head said.

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