Banks: Measures announced by government may take Romania closer to recession

Representatives of the banking community in Romania, namely the Romanian Banks Association (ARB) and the Banking Business Owners Council in Romania (CPBR) have written an open letter to the government warning that the legislative proposals announced by Finance minister Eugen Teodorovici earlier this week will have deeply negative effects, and that there is a risk for Romania to be pushed closer to recession, Agerpres reports.

“The effects of these initiatives will not contribute to stability and development, but will bring us closer to an economic recession. This recession means a depreciation of exchange rates, a drop in the real estate market, lost jobs, more expensive financing – overall, a hit to the well-being of all Romanians,” the letter reads.

The bankers also write that the Romanian banking system has responsibly ensured the country’s financial stability in the context of the previous economic crisis: shareholders bore all the losses from their own funds, they maintained financing lines in the most turbulent period and supported economic recovery through cheap and stable financing for the state and for the real economy of countries in the region.

“In this context, the financial system follows fiscal policy depending on the government’s priorities, but also strongly disapproves of: adopting measures without prior consultation to establish their efficiency and impact; mystifying the way banks do business in Romania; blaming the entire banking system for structural problems of the Romanian economy (lack of investments, fiscal and legislative unpredictability, incomes unadjusted to productivity, inflationist policies),” the bankers wrote.

The two organisations say that statements by state officials have turned the banking system into an enemy of the state – a false, damaging and useless point of view.

“This strategy politicises the relationship with a key partner in economic development – in fact, the main financier of the Romanian state – and undermines institutional trust. In the current economic and geopolitical context, this decision will have high trust costs for the Romanian state. The financial-banking system in Romania will follow its legislative and fiscal obligations, as it has been doing all along. The sector’s mission is to offer a better life for clients, economic stability and a more secure future. It’s true that those who work hard sometimes make mistakes, but the financial sector has made mistakes and taken responsibility for them. From its own money, not from public money! But this sector can’t accept being treated as an enemy of the state or paying for false claims that cause misinformation of public opinion,” the letter reads.

ARB and CPBR say that the introduction of support programmes for the creation of high-skilled jobs would have been much more useful.

“In a year with a special meaning for Romania, the country needs a vision, a plan for the future. Romania urgently needs to recover the gaps that separate it from developed Europe and must take the opportunities of the period we’re in. These are Romania’s true priorities and the response to the challenges of both the present and the future is obtained through dialogue, collaboration and consensus, and not through unilateral and unfair decision. We are and will continue to be open to these talks, because we are concerned with the future of the country. Looking at the current situation, however, the future looks totally different: the measures announced by the government risk accelerating the arrival of a recession in Romania. We believe that a decrease of trust can have even larger costs, and this is definitely in opposition to the purposes of these measures. In 2019, Romania doesn’t need a new 2009 – it needs cohesion and the force of all the entities who want it to make progress,” the document says.