Geoană: The fate of Romania"s economic recovery hangs in the balance these days

The president of the Senate, the leader of the Social Democrat Party (PSD), Mircea Geoană, claims that the fate of Romania"s economic recovery hangs in the balance these days, and he said that the worsening of the Romania"s economic situation requires the renegotiation of the loan agreements concluded with the IMF and the European Commission.

Mircea Geoană said: ""It is obvious that the worsening state of the economy will lead to the renegotiation of the agreement with the IMF and the European Commission. It is also obvious that these days are decisive on whether Romania will receive the second tranche of the IMF and EC loan, which, given the dramatic contraction of the economy, is becoming indispensable for providing a modicum of budget security and the resources needed for the payment of pensions and salaries and the good functioning of the Romanian state. But, at the same time, I believe that the presence of the IMF in Bucharest must be considered an opportunity for the Romanian government. I hope that the Government will present the second generation of anti-crisis measures, some proposed by PSD, some proposed by other parties".

The leader of the PSD warned that "if we are going to stand by and idly watch the economy go down the drain", it is very likely the economic recovery will be greatly delayed, and the social and economic costs will be extremely high.

• Geoană: "The borrowed money isn"t reaching the real economy"

Mircea Geoană considers that the Romanian Central Bank made the right decisions, based on the foreign loan agreement.

In his opinion, the problem is that the money that should be directed to the real economy, isn"t reaching its destination: "The problem that we are facing at this moment as pointed out by all businessmen, is that the scheme proposed by the Ministry of Finance is one that won"t allow the direction of the available funding towards the banking sector and the real economy. Right now after the lowering the minimum mandatory reserve, instead of giving out loans, the banks are actually lending those very same funds to the Ministry of Finance at 4 - 4.5% interest".

In other words, according to Mircea Geoană, "this money just moves between the Central Bank and the Ministry of Finance via the commercial banks", with none of the funds released flowing into the real economy. "In fact this was the main reason of taking out the loan from the IMF, not just to cover the budget deficit, but to bring liquidity to the economy as well"", the chairman of the PSD said.

• Without credit, the business environment is choking

In Geoană"s opinion, Romanian entrepreneurs are "choking" without lending, and "banks have become extremely scrupulous, and sometimes even opaque" towards corporate customers, as quoted by Agerpres.

The leader of the PSD said: ""What the Ministry of Finance is doing today is essentially collect all the money on the market, whereas commercial banks are very happy, making their profits off trading state bonds and betting on the exchange rate, but getting them to resume lending has been a failure. From my point of view, the first objective of the agreement with the IMF and the EC, of providing liquidity to the real economy, has not been reached. I thinks that these days, the fate of Romania"s economic recovery is hanging in the balance. We either want to leave the crisis behind us at relatively quickly, at the same time with the American and Western European economies, or we fail to take decisive steps right now, and we fall even further".

• Support for the industry

Geoană provided insurance that he would support projects of mayoralties of cities with industrial heritage, which are plagued with unemployment issues and that have been hit the hardest by the crisis.

""This should become a state policy in the near future, aside from Nabucco, and the discussions on Southstream, and what we plan to do in the coming years, for companies still owned by the Romanian state, is to modernize and streamline them, to allow them to go out into the regional market, to allow us to have economic and financial leverage just like other countries in the region do"", the leader of the PSD added..

• PSD leader Mircea Geoană wants his party to govern alone after the presidential elections.

Negotiations for obtaining the second installment of the agreement with the IMF and the European Commission.

Geoană: The scheme the Ministry of Finance is currently proposing does not allow the direction of the funds released by the Central Bank towards the banking sector and towards the real economy.