ECONOMY FINANCE&BANKING

Iohannis: Romania is going in a wrong direction from an economic point of view, future generations to pay the bill

Romania is going in a wrong direction from an economic point of view, ignoring the investments and almost exclusively relying on consumption, but the country’s budget situation won’t be cosmetized indefinitely and the next generations will be the the ones paying the bill, shows a message of Romania’s President Klaus Iohannis, delivered by Presidential Advisor Cosmin Marinescu on Tuesday, in the opening of the Financial Market Forum.

“Currently, from an economic point of view, Romania is going in a wrong direction. The current policies are on the opposite lane of economic responsibility. This is why it is particularly important for the financial sector to demonstrate itself the concerns for sustainability,” the head of state showed.

The governmental policy neglects precisely the vital sources of the long-term growth, namely investments, he underscored.

“The lack of investments in transport infrastructure will cost us dearly in the future. Unfortunately, the current governance demonstrated its inability to build something sustainable for Romania’s future. At the same time, the burden of deficits is increasing, with implications over the living standards of the Romanians in the future. Romania is the only country in the EU whose budget deficit starts with ‘3.’ And the growing budget deficit doesn’t mean abstract figures, but real consequences which affect the daily life of Romanians: growing prices and inflation, high interest rates and Romania’s continuous indebtedness, namely of the future generations,” the message shows.

Furthermore, Iohannis referred to the growing budget deficit. In 2018, this indicator increased by 17 percent at the record level of over 15 billion euro and, in the first quarter of this year, the value of the indicator went up 34 percent against the similar period of last year.

“We are the only country in the region whose trade deficits increase and this thing means we are losing opportunities for the national production. We’ve all seen recently that the current governance indicates record productions in agriculture. Indeed, Romania is currently the champion of grain exports, although the added value of cereal production is low. But, at the same time, it is also known that Romania is the champion of edibles and food products imports. We are exporting cereals and importing food,” the message delivered by Marinescu mentions.

These are just some of the manifestations of the volatile economic model, almost exclusively based on the expansion of consumption, which neglects the main development engine: investments.

“This way of governing should cease, it doesn’t do anything else but to transfer the bill into the future. Under normal circumstances, we would have expected the Government to have sustainability guarantees for the future. Romania’s public finance cannot indefinitely relay on the cosmetization of the budget situation. The business milieu and the financial sector are most acutely deprived of this credibility, fueled by the lack of predictability through dangerous and inadequate measures, such as those of OUG No.114, difficult to understand in terms of the need for financial sustainability,” Iohannis conveyed in his message.

He showed bankers and representatives of the financial institutions who attended the event that they have a very important role regarding the financial education of general public.

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