The planned National Development Bank (BND) is part of a strategy to reorganize all the state-owned financial-banking companies, and will allow, for instance, the accessing of funding under the Juncker Plan, Finance Minister Florin Citu said on Thursday evening.
“The Development Bank – yet another state-owned bank when we already have so many state-controlled banks – is part of a strategy to reorganize the entire package of financial-banking companies owned by the state. Why do we need this Development Bank? Because the way these financial-banking companies are organised, none of them can access money from the Juncker Plan, for example. This is a very serious issue. Also, it will be a vehicle to direct substantial funding to Romania. Moreover, with a development bank in place one does no longer have to turn to the European Bank for Reconstruction and Development or the European Investment Bank when one intends to do an important, a strategic project in infrastructure, for example. I guarantee you that it is part of a move to reorganize the entire package of state-owned companies in Romania in such a way that they all have a liberal vision and are all profitable,” Citu explained at the Realitatea Plus broadcaster.
The National Investment and Economic Recovery Plan unveiled by the Executive on Wednesday provides for the establishment, under a separate regulatory act, of Romania’s National Development Bank, a full-fledged development institution organized as a joint stock company.
According to Agerpres, BND will be 100 percent state-owned through the Ministry of Public Finance, and will carry out financial activities, especially in its own name and behalf, within the scope authorized by the National Bank of Romania, but also under the state’s mandate, acting for instance as a Holding Fund Manager or dealing with the Three Seas Initiative Fund, according to the provisions of the Government’s Emergency Ordinance No. 99/2006 on credit institutions and capital adequacy.
“The BND shall act primarily as a financial intermediary with the aim of alleviating the financial market’s dysfunctions and the identified financing gaps, as well as for increasing the absorption of EU structural funds,” the investment plan states.
BND revenues will come from the activities carried out in its own name and behalf: the direct financing products will generate interest income; for direct financing products, the BND can provide consulting services to both SMEs and infrastructure projects, charging fees for these services; management fee for the services provided as a Holding Fund Manager.
The sources of financing for BND’s activity are the capital subscribed by the shareholder, loans from the interbank market, loans from international financial institutions (EIB Group, EBRD, World Bank, etc.), subordinated loans from the Ministry of Public Finance, bonds for institutional investors.
The National Development Bank will not attract deposits from the population in order to not pose competition to commercial banks, but will only have accounts opened by the eligible beneficiaries of the offered products.
Increasing pensions by 40 pct would mean disaster; 10 pct is only increase possible this year
The only increase of pensions that can be operated by the Government this year is 10 pct, and an increase of 40 pct would mean a disaster for Romania in this period of global economic crisis, said, on Thursday, the Minister of Public Finance, Florin Citu, at private broadcaster Realitatea Plus.
“We understand very well that this problem exists also for the pensioners of Romania. It’s not a populist thing we’re doing, this increase of 10 pct, it’s also a moral duty. But this 10 pct is what can be done now. (…) 10 pct means a percentage point increase of the budgetary costs, so even 10 pct means very much, and 40 pct means Romania will be isolated from foreign investors. We will be isolated. And it immediately means a destabilization of public finances in Romania. It’s too high a cost, that we cannot bear. A 40 pct [increase] would be a major risk for economic stability in a period of 4 pct economic growth. In a period of global economic crisis, such a thing would be a disaster for Romania,” said Florin Citu.
The Minister of Finance maintained that the Government will find the political solution not to infringe the law by only increasing with 10 pct the pensions from September 1, given that the law provides for the 40 pct increase of pensions, and the Social Democratic Party (PSD) has a majority in Parliament.
“This will be a political decision, just as we took the decision to delay the law of doubling children’s allowances. We will find a solution. It was harder to find the resources to increase the pensions even by 10 pct, which is an important budget effort in a year when we need investments, in a year in which we need to increase the production capacity of the economy, to save companies, to save jobs. While we speak of this pension increase, there are tens of thousands, hundreds of thousands of Romanians which were in furlough, a million people were furloughed, there is a budget effort there as well, because we paid on the one hand the furlough, but in order to help them return to their jobs we have a program by which we pay 41.5 pct of the salary,” Florin Citu mentioned.