Nicu Marcu is no longer head of ASF, Anca Dragu - governor of the National Bank of the Republic of Moldova, "collective" at Ferma Dacilor

The incompetence of the public authorities left its full mark on the end of the year, the month of December being marked by two tragedies that show the fact that, despite the tragedies at Colectiv and Crevedia, despite the scandal of the Asylums of Horror and despite the fires that included several hospitals during the Covid-19 pandemic, the public system is completely covered by corruption, a criminal phenomenon that, unfortunately, results in more and more victims.

Thus, on December 18, 2023, the wall of the boarding school of a high school in the town of Odorheiu Secuiesc collapsed over 50 students in class. As a result of the incident, one of the teenagers lost his life and three girls were injured, one of them being in a serious condition in the hospital with a fractured spine. The culprit was designated the administrator of the company that was executing works in the immediate vicinity and that would not have respected the legislation in force regarding the execution of these works, non-compliance that was not prevented by the civil servants in the respective locality.

A week later, on December 25, on Christmas, 8 people lost their lives in an accommodation unit located at Ferma Dacilor in the town of Gura Vadului, a unit that, although it had a classification from the Ministry of Economy, Entrepreneurship and Tourism, was operating illegal as it had neither a building permit nor a fire safety permit from the Emergency Situations Inspector.

Only after this tragedy, more than 8 years after the tragedy at Colectiv, the Ministry of Economy, Entrepreneurship and Tourism decided that it is necessary to initiate, together with the Department for Emergency Situations, a project of a normative act to change the legislation in the field of approval of units from tourism and HoReCa.

In all this sad context, we also note three positive things that happened in the last month of last year. The first is the change in the leadership of the Financial Supervision Authority. The Parliament, with one exception - Daniel Armeanu, vice-president for pension funds -, decided not to renew the mandates of the Marcu team, who from the head of the ASF assisted impassively in the bankruptcy of two large companies in the insurance market - City Insurance and Euroins - , to the disruption of the RCA market and to illegal collusion in the capital market. Alexandru Petrescu, the new president of the ASF, stated at the hearings in the Parliament that such phenomena will no longer be tolerated in his mandate and that together with the new management team he will work for the Authority to fully comply with its legal obligations.

The second piece of good news is the appointment of the former president of the Romanian Senate, Anca Dragu - former minister of finance in the Cioloş government - to the position of governor of the National Bank of the Republic of Moldova, a position she holds following her vote by the political majority in the Parliament from Chisinau.

The last good news came at the end of the year when the Council of the European Union announced that an agreement had been reached for Romania and Bulgaria to enter the Schengen area with air and sea borders, from March 31, 2024, but without offering a calendar regarding accession with the land border.

Regarding the macroeconomics, we show that the Parliament adopted the state budget for 2024 before the winter holidays, a budget that foresees an increase in the Gross Domestic Product by 3.4% and a cash budget deficit of 5%. According to the normative act adopted by the Parliament, the exclusive revenues of the state budget would increase by 20%, which represents an unrealistic premise according to the Fiscal Council's Opinion on the state budget law, a premise that risks leading to a larger budget deficit at the end of 2024 than the one estimated by the Government.

Especially since the budget execution for the first 11 months of the year, published by the Government at the end of December, shows that the estimates regarding budget receipts for last year were not respected, the only month in which the plan was realized was December, according to the statements of 30 December of the Minister of Finance, Marcel Boloş.

The collection deficit led to an increase in Romania's total external debt, a debt that increased by more than 18 billion euros in the first 10 months of last year, according to the report presented by the National Bank of Romania in mid-December.

The only good news regarding the macroeconomics is that the inflation rate stood at 6.7% at the end of November, according to the report of the National Institute of Statistics published on December 13, 2024, a rate that is below the estimate of 7.5% made by the BNR in August 2023 for the end of last year.

• State incompetence kills

The flawed way, self-interested or not, that civil servants use theirs duties led in December 2023 to two tragic events that resulted in 9 deaths.

The first took place on December 18, when, following the works carried out in the immediate vicinity of the water network, the wall of the boarding school of the "Tamasi Áron" theoretical high school in Odorheiu Secuiesc, a building built between 1909 and 1910, collapsed on top of the 50 students inside. The teenagers sensed what was about to happen and most of them managed to flee the path of the impending disaster, but four of their classmates - a 17-year-old boy and three girls aged between 15 and 17 were trapped under the rubble. The young man who was going to turn 18 in a few days lost his life, the three girls were injured, one of them is in serious condition in the hospital after fracturing the spine.

The said building should have undergone seismic strengthening given the fact that it was more than 100 years old, but neither the local nor the county authorities found the necessary funds to carry out such work until last month. So the vibrations produced by the works carried out on the nearby water network had a negative effect on the brick wall which collapsed on top of the students in classes, although these works should not have been carried out in that context.

The administrator of the company that carried out the works admitted that he ordered their completion and therefore was prosecuted by the prosecutors, but this does not explain why no representative of the City Hall supervised the works in that area on a daily basis, especially since at locally, it was known that the said building is one with a very high seismic risk. Following the investigation carried out, at the beginning of 2024, according to the prosecutors, the culprits for this tragedy would be the designer of the sewer connection works, the executors and the owner of the building, since they would not have respected the norms regarding the works, and the wall would have collapsed due to excavation procedures, which were not provided for in the construction permit. The file has not yet been sent to court, and the degree of responsibility for each of the culprits will be determined.

The only "consolation" for the families of the victims was that on December 21, the Government allocated two aids of 8,000 lei each for the two slightly injured girls and an aid of 10,000 lei each for the family of the deceased young man and for the family of the student in a coma after the fracture at column.

Only a week after the tragedy in Odorheiu Secuiesc, when everyone was celebrating the Nativity of Christ (Christmas), another tragedy was in the foreground of attention: the fire at Ferma Dacilor, an objective located in the locality of Prahove, Gura Vadului, an event following which and - 8 people lost their lives (out of the 26 in the boarding house) - mostly children and young people, among the victims being the son of the owner of the boarding house.

According to the investigators, the fire would have broken out in the morning of December 26 from the attic of the boarding house built without complying with the legislation in force and would have spread quickly consuming everything in its path, including the restaurant on the ground floor, since the entire construction was made of wood, which it was not fireproof. Prosecutors claim that the ignition was caused by the heating of a television left on, which overloaded the network designed in the documents for a water pump, and not for a guesthouse. It appears from the prosecutors' indictment that in the period 2014-2023 the owner built new buildings and a kitchen, and the refrigerators, electrical installations, air conditioners were powered from an 8 kilowatt installation that was undersized, which led to voltage fluctuations . None of the new buildings, nor the objective where the tragic event took place, had a building permit, but only a building certificate, which shows that all the buildings were erected illegally. Moreover, Ferma Dacilor had no authority or fire safety approval from the Inspectorate for Emergency Situations Prahova, whose employees crossed the threshold of the guesthouse several times, issuing warnings, but still tolerating the illegal activity.

However, the guesthouse had a one-star classification from the Ministry of Economy, Entrepreneurship and Tourism, because the patron benefited from the lax legislation in this area, after initially being denied the three-star classification of the respective location. Following the tragedy, MEAT initiated a process to amend the legislation that still provides for the awarding of a star for accommodation units, only on the basis of a self-responsible declaration by the administrator that the respective unit has all the necessary approvals.

Following the tragedy at Ferma Dacilor, the legal administrators of the company were arrested at home, and for the real administrator, Cornel Dinicu, the court ordered preventive arrest for 30 days. In the case, the former mayor of Gura Vadului, a civil servant from the City Hall, the first deputy chief inspector of ISU Prahova and two more officers from the respective inspectorate are under criminal investigation and will be prosecuted.

As in the case of other tragedies, immediately after the fire at Ferma Dacilor, the Government ordered extensive checks at the tourist units regarding the existence of the fire safety notice. Following the checks, it was found that more than 3000 checked guesthouses and hotels that had tourists during the winter holidays did not have this approval, and more than 1000 of them are located in the Prahova Valley.

• Inflation of 6.7%, debts increased by more than 18 billion euros

The incompetence of public authorities emerges not only from the two tragedies that took place in the last month of last year, but also from the way they managed the state budget adopted a year ago.

The deficit of budget receipts was felt to the full and in this context, the Ministry of Finance continued to borrow from the national and international capital market, and from the population through the issuance of government bonds, in order to have the necessary money to carry out budget expenditures, including for the payment of pensions. Following these loans, the National Bank of Romania reported on December 14 that for the first 10 months of 2023, the country's total external debt increased by 18.54 billion euros, and the current account of the balance of payments recorded a deficit of 18, 34 billion euros.

The only good news came a day earlier from the National Institute of Statistics, which reported inflation easing to 6.7% at the end of November 2023, almost a percentage point below the 7.5% rate estimated in August by NBR for the end of last year. However, we remind you that an important role in keeping inflation under control is the compensation and capping of energy prices, as well as the capping of the commercial surcharge for basic foods, measures that are not consistent with the principle of the market economy. Despite the decrease in the inflation rate, INS data also show that the purchasing power of the leu maintained its decline to 57% compared to the purchasing power of the national currency in June 2005.

Regarding the macroeconomic situation, the BNR report on financial stability published in mid-December 2023 shows that the main systemic risks to financial stability have remained, but an intensification of economic and geopolitical uncertainties is observed at the global level. The central bank also noted that domestically, the tension in macroeconomic balances is assessed at a severe but relatively constant level, including as an effect of regional and international geopolitical developments, as well as from the perspective of the future conduct of fiscal and revenue policy. The BNR also identifies two other systemic risks: the delay in the structural reforms undertaken by the authorities and, implicitly, in the absorption of European funds, especially through the National Recovery and Resilience Plan (PNRR), a risk assessed at a high level, with no changes in the next period and the risk non-repayment of loans contracted by the non-governmental sector, quantified at a moderate level, but increasing.

In this context, the Ministry of Finance stated on December 29 that the arrears of the general consolidated budget increased by 8.83%, in November 2023, compared to the previous month, to 326.63 million lei, from 300.13 million lei in October . Moreover, the Finances announced that the general consolidated budget deficit rose to 4.64% of GDP after the first 11 months of 2023, respectively to 73.55 billion lei, compared to a deficit of 58.7 billion lei (4.19 % of GDP) related to the first 11 months of 2022.

• The state budget passes the Parliament, but is criticized by the Fiscal Council

Last year's situation regarding the failure to achieve the estimated budget receipts seems not to have been a lesson for the Government, since last month it sent the state budget and the state social insurance budget for 2024 to the Parliament for debate and adoption. The normative act foresees a 3.4% increase in the Gross Domestic Product, which will reach 1734 billion lei, a cash budget deficit of 5%, budget revenues of 33.81% of GDP and expenses of 38.8% of GDP. Average gross monthly salary taken into the calculation of the state budget was 4,733 lei. State budget revenues (exclusive) are scheduled to increase in 2024 by 20% compared to 2023, and public expenditures are increased by 6.56%, given that the budgetary impact of the pension increase will be 25 billion lei this year .

The budget was quickly debated before in the specialized committees of the Parliament and was quickly adopted, although the draft numbered 12,000 pages, of which 5,000 pages contained the amendments submitted by USR, AUR and UDMR. The budget of the State was voted by the Parliament on December 20 with 299 votes for and 82 against. In the same meeting, Parliament also voted on the state social insurance budget, which passed the Legislature with 294 votes for and 84 against.

The meeting of the reunited plenary provided yet another proof of the pitiful level at which the political discourse has reached, there were several violent verbal conflicts between the AUR parliamentarians and those of the UDMR, between the independent senator Diana Şoşoacă and the president of the AUR, the deputy George Simion, but also the abnormal behavior of the social-democratic deputy Daniel Ghiţă who chose to physically listen to a political opponent from the USR. The uncontrolled exits of the parliamentarians prove that, no matter how much the regulation of the two Chambers changes, the recalcitrant senators and deputies are not going to give up their aggressive way of demonstrating in the legislative forum of the country.

Even though it passed the Parliament, the state budget for the year 2024 was harshly criticized by the Fiscal Council which, in the opinion issued, showed that the budget construction for the year 2024 which envisages a cash budget deficit target of 5.0% of GDP, has a big problem regarding the budget revenues estimated by the Government. The members of the Fiscal Council state in the 81-page document: "Regarding the ex-ante inclusion in the budget projection of hypothetical revenues of 19 billion lei, coming from the desired improvement of the efficiency of ANAF collection/digitalization, the Fiscal Council cannot take them into account by virtue of the principle of prudence. Consequently, the Fiscal Council considers it possible to collect revenues lower by around 19 billion lei, representing around 1.1% of GDP, compared to the targets assumed in the draft budget".

Furthermore, the Fiscal Council states that during 2024, an additional 4.5 billion lei (0.26% of GDP) will be needed in the allocations for spending on goods and services and for social assistance, compared to the estimate made by the Government in the state budget law.

At the same time, the cited document states that the Government's estimated deficit of 5% of GDP for 2024 will not be achieved and that, in reality, we will have a cash deficit at the end of this year that will be around 6.4 % of GDP.

• Nicu Marcu, out of ASF

After the scandals of the last years in the capital market that took place under the closed eyes of the Financial Supervision Authority, the last month of last year brought a new management team of that public institution. Following the hearings in the specialized committees of the Senate and the Chamber of Deputies, the plenary session of the Parliament voted for the new management of ASF: Alexandru Petrescu - president, Gabriel Avrămescu - first vice-president, Gabriela Horga - vice-president for the capital market, Sorin Mititelu - vice-president for the capital market of insurance and Daniel Armeanu - vice-president for private pension funds, the latter being the only one from the Authority's former management team whose mandate was renewed by the Parliament.

Unfortunately, the hearings for the new leadership of the ASF demonstrated that the incompetence of this public institution in recent years is based on incompetence, carelessness or ignorance of the importance of the selection process for the members of the Board of Directors organized by the Parliament.

Given that the ASF annually oversees markets that carry out business of tens of billions of euros, to allocate only 90 minutes for the hearing of all candidates, in which each of them had two minutes to present themselves, to say what experience has and what he wants to do at the ASF, represents a gross negligence on the part of the management of the specialized commissions who delayed this procedure too much after the mandate of the Marcu team at the head of the ASF came to an end. In fact, it emerged from the debates that the members of the Nicu Marcu team are the main ones responsible for the problems in the capital market, especially in the insurance market, where they stood by impassively at the bankruptcy of City Insurance and Euroins, which caused damage to millions of policyholders, damage that will be paid from the Insured's Guarantee Fund.

However, to date none of the members of the former management has been held accountable for the faulty management they practiced at ASF.

• Anca Dragu, governor of the National Bank of the Republic of Moldova

On December 22, former president of the Romanian Senate and former minister of finance in the Cioloş government, Anca Dragu was appointed as governor of the National Bank of Moldova (BNM), for a 7-year term, her appointment being approved by 58 votes for by the Parliament of the Republic of Moldova. The Chisinau Parliament opted for Anca Dragu, through the prism of the experience she has in the financial-banking sector and in public policies and EU accession. Anca Dragu worked for over 15 years at the National Bank of Romania and the International Monetary Fund and was Minister of Public Finance between November 2015 and January 2017. In 2020, she was elected president of the Romanian Senate, a position from which she was removed by the new PNL-PSD coalition, after the exit of the USR from the Cîţu government.

Immediately after the vote of the Parliament in Chisinau, Anca Dragu said: "It is an honor for me to contribute to the European path of the Republic of Moldova. We need strong, independent institutions to ensure the country's economic stability and prosperity for all citizens. It will not be an easy road, but with patience, determination and skill we will be able to complete the European project".

Anca Dragu received her mandate on December 26 and mentioned that her return to the banking system is based on 27 years of professional activity in the financial-banking field.

• Half Schengen

On the last day of last year, the Council of the European Union announced that an agreement had been reached with Austria and the Netherlands for Romania and Bulgaria to join the Schengen area of free movement of people and goods, only with air and sea borders starting on March 31, 2024 That agreement was welcomed by the European Commission, which stated that negotiations for the waiver of controls and for land borders will continue throughout 2024, a decision in this regard being expected "within a reasonable period".

The decision of the EU Council was presented by the leaders of the ruling coalition PSD-PNL, while the leaders of the political opposition showed that the air and sea Schengen will not bring much benefit to the national economy, because the big losses are recorded at the land borders by the carriers of goods and by Romanian citizens who travel to the other countries of the European Union or who return home during the summer holidays and on the occasion of the winter and Easter holidays.

However, Cătălin Predoiu, Minister of Internal Affairs, stated that "Sea Schengen means that a trip by sea from Romania to one of the states in the Schengen Area is regarded as a trip inside the country, from one port to another, national ", but specified that this does not exclude customs or tax controls.

"But it's an advantage because, really, the port of Constanţa is becoming much more attractive at the moment", said Cătălin Predoiu, who mentioned that in terms of air Schengen, the Otopeni airport has had its infrastructure ready since 2011.

We also show that the former Minister of the Economy, Florin Spătaru, stated last year that our country loses 10 billion euros annually, due to the fact that it is not a member of the Schengen area with a land border. Moreover, a European Parliament report shows that 46,000 tons of CO2 are emitted annually due to the decision not to remove land border controls for Romania and Bulgaria. A report prepared by the National Union of Road Transporters from Romania states that the loss caused to road transport amounts to 2.41 billion euros.