When you have three bankruptcy in the insurance industry, with losses of the order of billions of lei, supported by the whole company, we have a serious regulatory problem. I have not seen anything concrete so far to avoid repeating the situation, so I can only see a new resounding bankruptcy in this industry, and the assurances we will all pay to climb to the sky Article on contributors.ro Eugen Rădulescu, counselor of the governor of the National Bank. He performs a balance sheet of administrative and politics, in the face of the economic growth registered in recent decades.
For good, bad, the economy of Romania continued to go honorably, continuing a trend that has almost three decades. The GDP of Romania in 1995, the first for which we have data published by the European Union based on a unitary methodology, was 28.6 billion euros. In 2024 he reached 353.8 billion euros.
The explanation for this colossal progress is primarily the functioning of the mechanisms of the free market and, yes, the pursuit of profit, which raises the income not only for investors, but also for the whole society. To this was added the fabulous amounts that represented net funding from Romania from the European Union.
All this shows that the infected propaganda of the so-called sovereigns is a lie from one end to the other. The fact that an appreciable percentage of the population swallows these donuts on the unmixed, horrifies me and gives me creeps.
“In the political area there was a malignant involution”
If, however, the economy has done its job and still does, to a much lesser extent, this can be said about the whole of the political class, in general, and about the administration of public affairs, in particular.
Over the years, many of the true professionals and people with ideas and intellectual performances have turned to the private sector. This is not surprising. All of them have seen their efforts and talents rewarded, both through financially higher financial results and by the satisfaction of doing in life what they think is more desirable.
One of the results of this state of affairs is that in the political area there has been a malignant involution. Through the 1990s, the public administration was made by professionals trained in the time of communism, so they had inevitable limitations and obtuses, but at least they had a certain decency and, I would say, measure in adopting some decisions.
One of the most eloquent examples is that, despite all the vicissitudes of the times, the budget deficit has remained within very reasonable limits until the time of the European Union.
What is the cruel reality
Of course, there were also factors somewhat independent of the desire of the political class that contributed to it. In the beginning, the very limited access to the capital market forces governments to keep the public deficit within very close limits. Then came income from privatization and the drastic reduction of subsidies for inefficient industries, which offered an additional breathing, ie they also allowed eccentric expenses, without them attracting an important budget deficit.
After accession to the European Union (but, among other things, it attracted the opening of financial markets and the decrease of financing costs), began the slip of public finances, which reached the unimaginable debate from 2024 – one year of peace, without special situations, such as the pandemic, but in which the public deficit reached an incredible 9.3%.
And I use this figure recently published by the European Commission not because it is greater than the one reported internally by our governors, but because this is actually the cruel reality, unfinished by postponing payments.
An explanation for the lack of constructive ideas from the elected
I am afraid that what happened to the public budget is only the directly quantifiable image of an unlikely skid of what the political class means, and the public administration, in particular.
The parties seem to have made a title of glory in promoting people who have never shone through anything but maybe by trick. If we take the CVs of Romanian parliamentarians, we take with our hands, seeing how many of them have finished any faculty not accredited by you where, if they really finished a high school and I know something about their baccalaureate diploma.
Such creatures obviously cannot produce constructive ideas, nor can they attract valuable people, who will do this in their place. And in order for the disaster to be total, the legislative system, otherwise tailored by the same nobody, makes the supporters' support staff employed, that is, the hope of escaping, over time, by the staff employed in the older legislatures.
As a result, to a terribly oversized Parliament for the normal needs of the society, there are several thousand good people hanging in who knows what circumstances through the auxiliary staff, with the result that any hope of improving things is suffocated.
What are the good examples
What is valid at the level of the political class peak is repeated in the smaller structures of the public administration. We have about three thousand territorial administrative units (UAT), which means not only the mayors and the excessive staff related to each of them, but also the local councils, who fulfill, as far as the naked eye can be seen, two important functions: it is a public money and are constituted in spheres of influence for the realization of public procurement on any other criteria.
That's not all. There are numerous administrative structures with regulatory role, for a good functioning of the markets. During the period that has passed from the fall of the communist regime we have a very good example of why it can mean a smart regulation: mobile telephony, internet and cable media were, all, remarkable successes.
There has always been a competition in each of these fields, exclusively between private service providers, and the result is that, for all these, we have both quality and very reasonable costs.
And the banking activity was regulated adequately. I know that here I will be accused of Parts Pris, as one who worked for decades in the National Bank.
But I have two very strong arguments:
- It has been almost 25 years since there was no bank bankruptcy in Romania, and the latter did not generate any cost, except for the shareholders of the banks in question;
- The competition in the banking system has greatly reduced the margins between the interest on loans and those to deposits, to comparable levels at European level.
There are enough years since the banking system is no longer a part of the problems of the company, but one of the solutions for them. The financial crisis of 2008 also surprised the Romanian banking system on the wrong foot, and the rate of non -performing loans has climbed to incredibly high levels in the coming years.
However, the cautious administration of the situation and the new money contribution of the shareholders of the banks (and we are talking about many billion lei!) Have led to the resorption of losses and avoiding any bankruptcy, as well as spending public money to save banks.
The domains with failures of proportions. The first example: ANAF
Only Romania and four other countries in the European Union have managed to avoid public subsidies to save banks. The banking system then consolidated its situation, non-performing loans have descended to comparable levels with the best results in the European Union, and the pandemic has not caused problems that banks cannot strictly solve through internal resources. All this makes me say that my assertion is not a pris part, but a tangible reality.
Unfortunately, many other fields have recorded proportions in fulfilling their duties. Here, in the first place I would place the National Agency for Fiscal Administration (ANAF). Over a third of VAT due it does not get collected! We talk here about tens of billions of lei every year. I don't know why this happens.
I am not an expert in the field. I see only the result, that is, a colossal large tax fraud, which no one has been reached for decades. The average of VAT is not in the European Union about five percent; It is over seven times larger!
The problem left in insurance, after three bankruptcy
There are many other areas where the regulation made by the state authorities is terribly deficient. When you have three bankruptcies in the insurance industry, with losses of the order of billions of lei in each of these cases, losses that the shareholders do not support, but the whole society, in one form or another, we have a serious regulatory problem.
I have not seen anything concrete so far to avoid repeating the situation, so I can only see a new resounding bankruptcy in this industry, and the insurance that we will all pay to climb to the sky.
The skid from a rational conduct of the authorities has many more forms of manifestation.
Read the continuation on contributors.ro.
