Could They Be Foreign? Romania Borrows Money To Pay Corporate Debt

• Basescu accuses Tariceanu Government of having spent 3 billion EUR from the BCR privatization on the election campaign

President Traian Basescu addressed the Parliament plenum yesterday on current affairs of the State in the broader context of the economic and financial crisis. Referring to a potential foreign loan, the President emphasized that Romania needed a safety belt to get out of the crisis and better face the extremely difficult circumstances. According to him, the foreign loan is necessary because of the large current account deficit and the substantial private debt, for which the service due this year stands at 24 billion EUR, and not because the State budget needs support. In other words, the President"s message to the Parliament is that Romania will probably take a loan to pay off the private sector"s debts.

The President also mentioned that, for the first time ever, the European Union was disbursing funds to help Members only in partnership with the International Monetary Fund, which is still vivid in the grim memories of some Romanian politicians, who claim it is not so necessary to sign an agreement with the Fund. However, Basescu begged to differ: "Such loan will make us more capable to withstand a potential sudden collapse of the global economic situation." While many branches of the economy see their own demise looming in the near future at the end of a chain of bankruptcies, the President believes that, at the end of the crisis, Romania could be a modern, reformed state.

Basescu told Parliament that Romania had 9 billion EUR made available by various financial institutions, but the money had not been used for development. In his opinion, if 3-4 billion EUR from the funds made available by the EIB, EBRD or WB was actually used, Romania could secure even minimum economic growth, jobs and development. According to the President, structural funds made available to Romania and not used had reached 5.5 billion EUR by the beginning of March. "For some of them, we have started paying penalties worth millions of euros every year because we do not use them," Basescu told Agerpres. In his opinion, this state of affairs confirms the inefficiency of the public administration which seem to him that was built on influence peddling and nepotism, rather than competence.

Basescu also criticized the former Liberal Government, which had shown no prudence towards public spending in the last two years of their term. According to him, the lack of reform in 2007 and 2008 - when his party, PD-L, which he is still running unofficially, was not in the Government - was currently paid for by the taxpayers. Thus, the President insisted on the need to urgently adopt far-reaching reform measures, because Romania was lagging behind the other E.U. Members in terms of both social and economic aspects. Basescu focused his speech on the problems currently facing the public health care system and asked the Government to urgently create a strategy to reform both the system itself and the related legislation. In his opinion, the public health care system is one of the worst performing in Europe, being affected by both a lack of transparency and a lack of funding.

Basescu warned that the lack of reform measures for the health care system during the Liberal Government was creating a risk for the current Government to deplete the health care budget well before the end of the year. "I would like to point out that there is a major risk of having the unreformed health care system deplete its budget before the end of the year," Basescu said, explaining that, if so, the current Government would have to find additional funding and thereby increase the budget deficit.

The President further accused the former Government of having spent 3 billion EUR from the National Development Fund for their election campaign. According to him, the origin of the money is the privatization of the Banca Commerciala Romana, the country"s leading commercial bank. Basescu emphasized that, should Romania continue in such a way, the adoption of the euro in 2014 would be compromised. He described the European currency as a stability factor in the current context of economic crisis. "This is the result of the triumphalist propaganda of the non-transparent governance, a poor governance which Romanians have to pay for now," the President said referring to his former and current opponents in the forthcoming presidential elections.