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Christian Traunfellner, Immofinanz
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Funds and games

We all rejoiced when Romania joined the European Union. The year was 2007 and we all hoped that our lives would change significantly, obviously for the better, especially in terms of income

March 2012 - From the Print Edition

Undoubtedly one of the most important mirages which drew us into the EU’s trawl was the non-refundable European funds – not simply for the sake of spending some money, but to really invest in the country so we might move closer to the living standards of Western countries.
The economic crisis has made a strong imprint on Romania, but salvation could come just from the fact that we have at our disposal the cheapest available resource: EU funds. But even the National Bank governor, Mugur Isarescu, says, “EU funds have not increased. Net inflows from the EU have remained about the same level. [...] It shows us a missed opportunity.”
It is a shame that since 2007 the Romanian authorities have proved unable to increase the rate of absorption of EU funds, considering sufficient a few token efforts to attract an extremely low sum in absolute value each year. Instead it was much easier for us to borrow, under the careful and “protectionist” guidance of International Monetary Fund representatives.
The bottom line of this monetary market is that we were the customers and unfortunately instead of choosing the best offer, which required more work from us, namely to attract EU funds, we chose the least economically advantageous, but fastest option – the IMF loan.
Unfortunately by doing so, we haven’t escaped the worst, as it is almost time to repay this money, plus the related interest. Fortunately, the new government says it intends to increase Romania’s absorption rate of European funds, but it could be too late.
Assuming that even at the last minute we were able to attract more funds, the loans still remain and any kind of “early repayment” is practically impossible in the context of estimations for economic growth of less than 2 percent, which still seem optimistic.
In other words, to meet the difficult challenge of repaying this loan it is no longer sufficient just to pay lip service to absorbing EU funds; Romania must really put its back into it. I’m afraid that all the talk will remain just pretty words, which would hurt the country and the local political climate even more.
The authorities should have given impetus to the establishment of the Ministry of European Affairs, which promised that the absorption of European funds would increase visibly. Unfortunately nothing happened and a new statement like this would just underline the public conviction that an increase of the absorption rate to 20 percent will not occur in any case. It’s been a month since the new government was sworn in and nothing has changed. Will there be any good news before the end of the year and is this target a realistic one?
The immediate impact would be a decent standard of living for Romanians, as almost one in two of us are at risk of poverty or social exclusion, according to Eurostat. The same research found that 31 percent of the population are in dire financial straits. I have never understood why we must always lag behind, given that Romania is a rich country with resources, but to paraphrase a joke, “too bad it is populated”.
I’m curious what effect these loans from the IMF, which plunge future generations into debt, can be having when most of Romania’s economic indicators suggest more bad news.
Can we say that we are satisfied with economic growth of just one digit (and a small one at that)? Unfortunately the conclusion is that we have to settle for too little, not only individually, but more concerning, at a macro level.
We appreciate the honesty of Prime Minister Ungureanu, who admitted, “We are the country with the lowest absorption rate of EU funds.” But it is not as though we did not know this fact and, even sadder, have to live with its consequences every day. ■



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