Romania's Ministry of Finance pushed the country further in the economic recession of 2009, with borrowing money from banks, which it used to pay salaries and pensions, instead of paying old debts to private companies, said in a press-conference Adrian Vasilescu, adviser to the Central Bank Governor Mugur Isarescu.
"This was a huge tab that private companies paid, while the public sector spent most of 2009 in a tranquil bay," added Vasilescu.
He went on to explain that commercial banks lent money to the Ministry of Finance which it primarely used to support the budget deficit, instead of paying its old debts to the private sector, which thus got another shove to the ground. "As you may recall, when the IMF analyzed the performance of the Romanian economy in the first three quarters of 2009, it concluded that all targets had been complied with, but one: servicing the domestic debt.
Vasilescu also said that the current economic crisis may not be compared to the world crisis of 1929/1933, as this one would change the world and force it into a new lifestyle all together.
There is no turning back to the same money flows and type of financing consumption, he said.
He added that the Westerners benefited from 30 years of a life-style dubbed "debt financed high standard of living." While Romanians enjoyed only a few years of such life-style.
Vasilescu said that the economic crisis elsewhere is stronger, since in Romania no bank folded. He added that crediting did not come to a halt, but slowed down in Romania. However, the crediting should pick up with giving money first and foremost to companies, which generate jobs and pay salaries, and only then may extend to individuals.
Translated by AAP