CORDIAL POLEMICS / THE NATIONAL BANK UNDER THE RULE OF THE LAW The watchword for gold is: keeping it safe

In its Tuesday issue, "Bursa", printed an interview with Lucian Isar. It was recorded by: Emilia Olescu and Ancuţa Stanciu. The first question: "Adrian Vasilescu claims that during the crisis, the National Bank would have committed a serious violation of the law had it used the country's gold reserve as collateral for a loan from the Bank of International Settlements, as you say he should have been doing. What is your answer?"

The answer came in two parts. The first part I didn't expect! It was a surprise. I quote: "The NBR broke the law when it financed Banca Transilvania or when it offered bilateral facilities only to banks that were friendly to various NBR employees. It is interesting how Isărescu's representatives don't discuss these measures from the perspective of their legality." A tactic along the lines of: "You're one to talk, when you used to steal apples from the neighbors' yards when you were children?"... Or in this particular case: "The NBR, who broke the law when it lent money to Banca Transilvania, is now worried about legality?"... The truth is that the NBR did not break the law when it lent money to Banca Transilvania!

Then, there was the second part of the answer: "Going back to the issue of borrowing using gold as collateral, the NBR wouldn't have broken the law by taking out a loan from the Bank of International Settlements", claims Lucian Isar.

The argumentation on legality is very easy to follow. If it wasn't legal to borrow against gold, then financing the state budget against the loan from the IMF deposited with the NBR isn't legal either".

That is where the hot spot is: the financing the budget out of the loan that Lucian Isar is referring to. The law requires interpretation. There are only three criteria taken into consideration for that. The literal, logical and historic ones. The literal one - if the sentences that make up the text of the law make its meaning clear. If not, if the text is fuzzy, we move to the next criterion: the logical one. If the text isn't clear that way either, then we apply the third criterion, the historical one. As has been interpreted before. Under no circumstances do laws get interpreted using analogies. Especially when it is done in an attempt to find similarities between situations that do not resemble each other.

What the state budget received did not come from the IMF loan parked with the National Bank. And the NBR wouldn't have had any right to divide this loan the way it was: from the World Bank - money for investments; from the European Commission - money for the country's budget that was in bad shape and with an excessive deficit; and exceptionally - money for the state's budget from the IMF, through the assignment of three installments of the loan to the Romanian state. And if the National Bank of Romania had withdrawn from the Agreement with the IMF, the World Bank and the European Commission - an agreement approved by the Romanian Parliament, which was in fact the only program for the country to exit the crisis, which was backed by the country's commitment to perform economically and was signed at a very low interest rate - the Agreement would have fallen through! And the NBR, by using the gold as collateral, would have been forced to take all the money into the currency reserve. Neither the public investment program, nor the country's budget would have gotten one Eurocent.

Since the spring of 2009, when Romania (and not the NBR) concluded a financial assistance agreement with the IMF, the World Bank and the European Commission, for the amount of 20 billion Euros, there have been many scenarios being discussed publicly or behind closed doors about how the borrowed funds were divided and spent. With a certain cyclicity and with slight changes here and there, those scenarios have appeared, disappeared, again and again. Despite the countless clarifications that the National Bank has publicly made. In the autumn of 2016, the makers of scenarios are at it again. Now we have Lucian Isar speaking about the "initiative of the NBR" to share the money with the budget. Were that the case, it would certainly be illegal. But it wasn't.

Out of the first Agreement concluded with international partners, the one for financial aid, signed in 2009 and completed in 2011, the borrowed money was allocated between the Government and the National Bank. Out of the committed amount, of 20 billion Euros, the Government has received 5 billion Euros from the European Commission and 2.3 billion Euros directly from the IMF - a one off loan. Both amounts have covered the budget deficit. The Government was also allocated 1 billion Euros from the EBRD and the EIB and 1 billion from the World Bank for investment projects. In total, 9.3 billion Euros.

Not one Euro of the European money, coming from the "European financial organisms" - I am referring here to the European Commission, which was joined by the EBRD and the EIB -, went to the National Bank of Romania. All the money borrowed from these organisms went to the government. Without having been "parked" at the NBR. Just like it was just fantasy that the NBR had obeyed "Barroso's order", the president at the time of the European Commission, and that it had divided with the international banks what it received from the European financial institutions. You can't divide what you haven't received.

The amount of 10.7 billion Euros was engaged exclusively with the IMF and was allocated to the National Bank of Romania, which however waived a tranche of 1 billion Euros. In total, it has drawn 9.7 billion Euros. All of that money went into the foreign currency reserves managed by the NBR, with the crucial role of contributing to the consolidation of the country's foreign credibility, together with the gold. That is also how the debt was paid, without involving the state budget.