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| PROSPECTS FOR THE ROMANIAN ECONOMY 05/03/2010 |
| (2010-03-05) |
| Last updated: 2010-03-08 17:43 EET |
 Among other issues, Isarescu talked about the financing of social services, a topic that has caused general discontent. Without explicitly pointing fingers, the official referred to Greece, saying that Romania should be wary of the example of a country lying only a few hundred kilometers away. Mugur Isarescu.
“It is common belief that social services are underfinanced. It means that this sector is not well balanced in relation to the economy. We see how only a few hundred kilometers from our homeland, high budget deficits and excessively generous pension systems, unsustainable by the economy, as well as overly expanded administrative structures, are leading to truly dramatic situations.”
Isarescu warned: “I can't see Romania stepping out of the crisis without motorways, and I can't see the pension system recovering without the country coming out of the crisis”. The governor of the National Bank is convinced that Romania does not have a system that allows pensioners to receive money from funds supplied by their own contributions earlier in life.
“We don't have a system that pays pensioners from their own contributions. Our system makes one generation pay the pensions of the previous one. But if we don't provide the younger generation with jobs, that system amounts to nought.”
Isarescu also drew attention on the fact that Romania's budget income stands at no more than 30 to 31 percent of the GDP, meaning that spending cannot stand at more than 50 percent of the GDP. Furthermore, he added that the taxation system is complicated and slow-moving. Sebastian Vladescu, Minister of Public Finances, said that although the Government aims to support the business environment, limited resources and exaggerated expenses connected to social protection are real obstacles. Vladescu also complained about the excessive obligations related to salary expenses, and said he favours a social cohesion policy and a fight against poverty, which must not upset the macroeconomic balance. According to the Finance Minister, the National Bank played a major part in fighting the crisis when it reached its peak. Vladescu noted that Romania has gone through tough times before, such as between 1997 and 2000, but has always managed to emerge from such tough times.
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