PRESIDENTIAL ADVISOR COSMIN MARINESCU HAS LAUNCHED HIS PERSONAL WEBPAGE "Let's stop racking up deficits in boom years"

Romania needs a healthy economic vision, one for the long term, coupled with the responsibility of the decision makers of economic policies, presidential advisor Cosmin Marinescu says in an interview posted on his personal website cosmin-marinescu.ro.

In his opinion, it is necessary to boost confidence in institutions and economic policies, which need to be designed with longer periods than the electoral cycles in mind: "For instance, a sign of responsibility for Romania's development is to permanently escape the trap of procyclical policies, in order words stop racking up deficits in years of economic boom, as was the case before the crisis.

The decision-makers need to think long term and do in the short term exactly what is the right thing to do for the long term. In that regard, we need a realistic government, that would transcend the short term and the quantitative side, in favor of the long term and qualitative approaches.

That means consistency when it comes to structural reforms, transparency and fiscal simplification, the uncoupling of political cronies from public funds, a cut in bureaucracy and the increase of economic freedom, so in other words, the deep rethinking of the relationship between the state and citizens. A healthy economy has to prosper from a qualitative point of view, through productivity and competitiveness, because that is where durable prosperity will come from".

In his opinion, prosperity cannot be built on budget deficits and public debt, on artificially stimulating consumption, which means a focus on the short term, and financial-monetary policies cannot indefinitely substitute real, structural reforms.

He says that Romania must enter a course of sustainable growth, based on a new model of economic development that would integrate three specific aspects: the issue of ownership and market economy which is specific to the transition; the issue of institutional harmonization - which is specific to European accession; the issue of unsustainable growth and financial irresponsibility - which are so obvious in the circumstances of the recent economic-financial crisis.

Romania is one of the countries of the European Union which is unfortunately reversing the trend of fiscal consolidation from the post-crisis period, claims Cosmin Marinescu, who warns that in 2015-2017, the deviation of the budget deficit seems to be one of the highest: "We mustn't forget the lessons of the recent crisis, we mustn't neglect what the budget deficit means for the quality of economic governance. Essentially deficits are a kind of bill which the governments use to shift into the future the cost of the current benefits. That explains the temptation for deficits, which in the EU has generated the sovereign debt crisis".

The presidential advisor says that, in spite of achievements in the productive sector, consumption remains Romania's main growth source. In that context, what is essential is the reinvigoration of private and public investments alike, says Cosmin Marinescu, who says that what matters the most is improving the administrative capacity of the authorities: "That is essential, especially to implement the major infrastructure projects - a situation which still seems to be Achilles' heel in the public sector".

In Mr. Marinescu's opinion, what will be crucial for Romania in the coming years is foreign competitiveness.

Last year, Romanian exports exceeded 40% of the GDP, but Romania's growth rate for exports has halved. Over the same period, amid an increase in consumption, imports have increased at an accelerated pace, twice that of exports, which has deepened the trade deficit and the pressures it brings with it.