The clear rules that establish the independence of the BNR and other regulatory and supervisory institutions must be preserved, and the clear rules, based on correct principles, must be applied in setting taxes and state budget expenditures, believes Lucian Croitoru, advisor to the BNR governor.

“Today I read a series of statements about reforms in the field of public spending that created doubts…about what is meant by reforms. Let’s take for example the statement that in all the institutions subordinate to the parliament there are goods and assets of Romania whose administration must follow “the same rules as in the rest of the budgetary institutions,” stated Lucian Croitoru.

“I had suggested that the reform of public expenses should be done following correct and, therefore, non-contradictory general principles. From what I have seen in the press regarding the “expenditure reform” the word principles have been used, but it is clear that it is not known what those are.

Not by chance, I explicitly wrote that the reforms must be limited to the budgetary sphere. The mixture with the sphere of specialized, self-financed institutions can only lead to serious distortions, which will negatively impact inflation targeting, the normal regulation of the markets. In the end, this mixture will not lead to anything good. Domains should not be mixed,” Lucian Croitoru also declared.

“In the state companies sector, they must have the opportunity to operate in commercial conditions. They must be conducted according to commercial principles, which are not identical to those applicable in the budgetary sphere.

In institutions that regulate and/or supervise financial markets, which society had to remove from government control, because otherwise they produced galloping inflation or produced serious distortions in the allocation of resources, the principles are different from those in the budgetary sphere. All of them are based on independence from the political sphere. For all these institutions, there must be general rules, equivalent to those in other developed countries, that allow them to function well,” added Lucian Croitoru.

“In the budget sector, it is different. This sector is intended to reflect the political will, but following principles that ensure the sustainability of the sector, because being a sector that uses 30-40 percent of GDP, any destabilization of it can destabilize the entire private sector.

“In conclusion: clear rules must limit the relationship between state companies and the public budget. Mostly they exist; the clear rules establishing the independence of the NBR and other regulatory and supervisory institutions must be preserved; clear rules, based on correct principles, must be applied in setting taxes and state budget expenditures.

“The main problem we are discussing today is related to the latter aspect and mainly concerns the waste and injustice of some rules that guide some expenses. If the right thing were done in this area, it would be a great progress. The mixture between fields seems to me rather a strategy to bypass the main problem and the correct solutions to it.”