Isărescu: "The fiscal-budget imbalance, the main problem we have to solve"

Romania's fiscal-budgetary imbalance is categorically recognized as the main problem we have to solve at present, believes the Governor of the National Bank of Romania (BNR), Mugur Isărescu. The head of the central bank points out that we are also facing a time pressure in terms of reducing the imbalances in the economy: "Of course it is not only a question, let's say financial or fiscal, to bring it closer to the subject, it has a component of political stability - The government must at the same time ensure political stability. It also has a social cohesion component. The measures that the Government will take, it will probably announce next week, will have to preserve social cohesion, to prepare the country for next year's elections. And, of course, it has the component of financial, fiscal, budgetary stability. How will all these things come together? Well, this is the art of the Government! The National Bank announced several months ago that we support any solution that comes out of this debate, which has a political component and which combines all three or four aspects".

• Daianu: "There are no miracles in the economy"

We are in a very difficult situation regarding the budgetary balance and the external balance, believes the academician Daniel Dăianu, the president of the Fiscal Council: "We have a very large structural deficit. It is said to be the largest structural deficit in the European Union, with various estimates placing it at around 6%. We must bring it to 3% if we want to enter the euro zone, if we want to have the necessary fiscal space to cushion external shocks, from wars to pandemics, crises. We will not be able to continue with such deficits! And this correction cannot be achieved by a miracle. There are no miracles in the economy! This correction means dissatisfaction, it means frustration, it means anger, because you have a crisis in the standard of living! People are scared, don't you see that pieces of drones are falling on Romanian territory and we are now also coming with a macroeconomic correction that must be done and that we cannot postpone?".

In the opinion of the academician, quoted by Hotnews, Romania made a monumental error in 2015-2016 when taxes and fees were reduced, while at the same time spending increased: "You rarely find something like this in modern economic history! Such a thing simply does not happen. We ended up with tax revenues from 19% of GDP to 15% of GDP, a decrease of 4 percentage points of GDP! And we were warned, the Governor knows! We were told: Don't play with fire because you won't be able to come back!"

• Lazea, BNR: "Everyone agreed that the economy grew on consumption, not on investments"

Everyone was satisfied in the past years that the economy grew on consumption, not on investments, draws the attention of Valentin Lazea, the chief economist of the BNR, who had two messages on Friday: "The first observation refers to the wonder that exists in the business environment that in recent years the economy was doing very well, it was buzzing, and this year who knows what accident happened. Someone made a mistake and got us into trouble with a car that was running really well. I draw attention to the fact that, since 2015, there has been a deliberate attempt to force growth through consumption, through a consumption greater than the domestic supply, i.e. through imports. The model of growth through consumption, through lower taxation, through increased imports and through deficits was very convenient for everyone. We would have seen this last year as well if it weren't for the energy crisis and the resulting inflation. It would also have been seen in 2020-2021 if it wasn't for the pandemic and consumption wouldn't have been suppressed because of this. But everyone was pleased, they were satisfied that the car was running, no one noticed that the car was running on imported gasoline, said Mr. Daniel Daianu. So the model was deliberately made, everyone agreed on consumption growth, not investment, and now the bill has come.

The second emphasis is that this whole change of philosophy was made in 2015, when the Ponta Government amended the Fiscal Code. Then the signal was given that the single quota no longer represents anything, it can be exempted from it as much as it wants, and the interest groups can apply pressure when and how they want".

A team of taxation experts coordinated by lawyer Gabriel Biriş presented, on Friday, an analysis (file:///C:/Users/Redactor%20D/Downloads/TTI_Study_Digital.pdf) of the repeated amendments to the Tax Code, as well as their impact in society. Among other things, the analysis shows that, after seven and a half years, only 47.6% of the paragraphs of the New Fiscal Code remained in their original form.

The Tax Institute was launched on Friday, the first think tank dedicated to analyzing the impact of fiscal measures in the economy, whose founder is the lawyer Gabriel Biriş.