Romania’s economy can overcome its current imbalances only by giving up the model based on consumption financed through borrowing and by speeding up the absorption of European funds, including those from the National Recovery and Resilience Plan, economic consultant Adrian Negrescu says.
„Romania must give up the steroids of debt-fuelled consumption. The message sent today by Governor Mugur Isărescu lays bare an extremely harsh reality. We cannot finance domestic consumption endlessly through borrowing and huge budget deficits without generating inflation that eats into people’s incomes. The way out comes from the full and rapid absorption of European funds and the money from the National Recovery and Resilience Plan. These billions represent a completely non-inflationary source of financing. In fact, they are the only funds we can currently rely on for investment. In addition, it is absolutely necessary to urgently redirect public spending away from clientelist programmes such as Anghel Saligny (stadiums, sports halls, cycle lanes, village parks, cultural centres, etc.) towards major transport and energy infrastructure projects,” Adrian Negrescu explained on Tuesday in a Facebook post.
According to him, a new motorway does not generate inflation, but connects a local factory to a wider market, reducing transport costs and stimulating real business.
„In addition, by absorbing European funds you kill two birds with one stone. European funds stabilise the exchange rate and finance development without raising interest rates or the national public debt to unsustainable levels. At the same time, the state must take responsibility for real tax collection. Full implementation, without technical blockages, of digital systems such as e-Factura, e-TVA and e-Transport, coupled with AI-based risk analysis, is mandatory,” the economic consultant added.
In his view, ANAF must bring the underground economy into the open in order to balance the budget.
„The good news is that some good steps forward have really been taken here. Nazare (Alexandru Nazare, the finance minister, n.r.) and Nica (Adrian Nica, ANAF president, n.r.) are achieving what the recent governments could not do: digitising and optimising ANAF’s operations. There is another important point that emerges from the BNR governor’s message. You cannot impose austerity or prudence on the private sector if the state apparatus continues to waste resources unjustifiably,” Adrian Negrescu stressed.
He believes that cutting unnecessary spending by public institutions, from goods and services to inefficient procurement, must be accompanied by the application of strict performance criteria in administration.
„A leaner, fully digitalised bureaucracy costs much less and no longer suffocates entrepreneurs with pointless procedures. In addition, Isărescu correctly points to the deeply negative social effect of anti-inflation policies. Falling wages in real terms hit vulnerable groups the hardest. The state’s response can no longer consist of blanket subsidies, handed out indiscriminately to everyone. For example, capping energy prices for absolutely all consumers cost the state budget billions of euros that could have been used in other sectors,” Negrescu also wrote.
According to him, public money „should be directed exclusively and directly to truly vulnerable citizens, through surgical social protection”.
„The rest of the savings can go directly towards reducing the budget deficit. In essence, the current deadlock can be overcome only if Romania’s economy gives up the steroids of debt-fuelled consumption. The bitter pill of a temporary stagnation in purchasing power is the right price to pay today to ensure real financial stability in the future,” the economic consultant added.
AGERPRES
