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Romania seeks more pragmatic and predictable government

The economic growth of the last five years is great for Romania, but is just the beginning, said Dacian Cioloş, Prime Minister of Romania, at an event in Bucharest organised by the Ministry of Public Finance and GlobalCapital. The country has to translate growth into development, to redress the inequalities between richer and poorer classes and regions. That means building a more productive, high value added economy, with investment in research and innovation; fighting corruption; improving governance at state companies; making the public administration more efficient; and stronger education and training. Above all, Romania must focus on generating prosperity for the younger generation.

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Romania is a country of many challenges, but also a country of opportunities in the present European Union.

Romania has advanced well economically, after making it through the recession and economic crisis of 2008-9. In 2017 we celebrate our 10th year of EU membership. 

Yet we remember well the post-accession enthusiasm, which was weighed down by the economic crisis. 

Romania was forced to make deep reforms, which were expensive from both a social and a political perspective. But since 2011 we have experienced economic growth, creating new opportunities for work and investment. 

Growth is good, but we must still confront regional disparities within Romania, and economic disparities between different classes of the population. That is why we have developed an anti-poverty programme this year, with long term measures to reduce these disparities, which have been emphasised by the migration of Romanian workers to western and southwestern Europe.

In Romania we are living in a paradox. We have enjoyed a few years of economic growth, which now presents us with the challenge of transforming this growth into a process of development, where disparities can be reduced between regions, social classes and rural and urban areas. However, we are going through a period of transition, in an electoral year, when we will move from one type of governance to, hopefully, another, more pragmatic, predictable and efficient one.

Our main objective, around which we have built the government programme and this year’s economic policies, was to ensure the predictability of economic and fiscal policies, while at the same time initiating reforms that not only have no negative impact on economic growth, actually stimulating it, but which more efficiently channel economic growth into development.

Fighting corruption

This is where we have started working, which will surely need to be continued in the years to come — to increase the state’s effectiveness in terms of the business sector, distributive policy, social policies and in continuing its fight against corruption, with more attention being given to prevention and education.

It is simply not enough for only the judiciary to fight corruption. All of us, by understanding that corruption leads to severe poverty, must change the way we carry out our work. 

Surely such measures for fighting corruption could lead to more efficient state involvement in the economy and in relations with its citizens.

So we have begun, with apparently more minor actions — measures to reduce bureaucracy and simplify and clarify the law.

These measures need to be backed up, in the years to come, with very clear political support. They must be complemented by a reform of public administration for greater effectiveness and to focus on results and on our citizens.

Reforming public administration

Of course, this reform cannot be done without de-politicisation. That does not imply eliminating politics from administrative relations, but rather clearly delineating the relationship between politics, government policy and public administration.

We started with some things here that we did not take any further, simply because we realised that they require political commitment to adopt the administrative reform.

But we do need this reform and to rethink administration, as well as what we have already begun — simplifying administration and cutting bureaucracy for the business sector and citizens.

Meanwhile, we have continued implementing corporate governance measures, to make the action of the state more effective, when it is a majority shareholder in companies.

These companies are mainly in energy and infrastructure, so efficient state action in running them creates opportunities to develop the business sector and make it more appealing.

It is no coincidence that private companies are very interested, not only in the government’s budgetary policy, but also in its corporate governance policy. 

These state-owned companies can be an asset to economic development, but they can also be a hindrance if they do not operate transparently and effectively.

So we have taken several measures to review the legislation on state-owned companies, to make it clearer, and to implement it in the recruitment of managers and administrative boards, as well as in the way we define their duties.

Stimulating R&D and training

We want to continue to advance in certain sectors of the economy. We have taken some fiscal measures that have shown clear results in the IT sector, for example. Using this same reasoning we came up with tax incentives for research, development and innovation, because future economic development, and particularly industrial development, are becoming increasingly connected to the outcomes of research and innovation.

Not only do we need to develop industry — we need to develop competitive industry, which produces added value.

To add more value to the economy, we also need to raise the quality of the workforce. Romania faces a lack of skilled workers. We already have companies investing in central and western Romania that are seeking workers from neighbouring countries.

Yet we still have unemployment above 6%. Although this is lower than the European average, it means we have the potential for a skilled workforce that can fill the jobs created through investment and economic development.

Therefore, professional training, dual training, and creating a link between business and the education system are very important for the near future, and we will at least improve legislation in this regard. 

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Capitalising on the diaspora

And then, Romania has several million citizens working abroad, mainly in the EU. Some of these have probably decided to settle there, but I believe we have great potential on which we can capitalise, while reconnecting Romanians working abroad with those in Romania.

Romania has an advantage in its relationship with Germany, with the Romanian Saxons and Swabians, who left Romania many years ago and are now well integrated into German society. Their connection to their homeland is beneficial to both the Romanian and German economies.

When we put in place a support system for the Romanian diaspora abroad, Romanian enterprises must not infer from this that we favour the Romanian diaspora over them. 

Connecting Romanian companies with companies from other EU member states through the diaspora can benefit the growth of Romanian capital, which requires a larger market than the Romanian one to develop. 

It may also help a social reintegration of the diaspora with the current situation in Romania. 

And we certainly need measures aimed at creating opportunities for the development and progress of domestic capital, because domestic capital means, for the main part, small and medium-sized enterprises, which make up over 90% of enterprises.

Domestic aims need foreign investment

However, if for populist political reasons our development of domestic capital opposes foreign capital, the Romanian citizen will lose out.

Therefore, we need to make domestic capital develop in tandem with foreign investments, which are needed in several economic sectors, but also in infrastructure. 

In the future, we must focus not only on economic figures, but more importantly on raising the quality of economic development.

Sustainable economic development means an increase in the added value produced in the economy, and in quality. 

We have come up with a programme named Competitive Romania, which proposes areas of intervention to establish economic development up until 2020. This involves not only measures in the economy, but also in education, health and infrastructure.

We need to boost capital market development and the adaptation of the labour force to the demands of the economy.

Bring the EU closer to citizens

Finally, a few words about developments in the European Union, and not only because of the Brexit issue or the economic crisis. 

The EU has gone through an extensive enlargement process, which in my opinion should have been followed by a more thorough process of integration of new member states.

In the years to come, we will be able to turn this context into an opportunity to redefine the EU in a way that brings it closer to citizens, and makes it more pragmatic and effective.

Certainly, Romania would like to be a more proactive member state. It would like to put forward ideas so that the tools we have at a community level will produce more security for citizens and generate more prosperity and development opportunities.

We should be thinking about inspiring the younger generation. The introduction of Romania to the EU and free movement in Europe benefited me when I was younger. But the younger generation is going through a difficult period now, with high unemployment among them.

Should Europe produce prosperity, it must produce it primarily for the younger generation. If young people do not believe in Europe’s capacity to produce prosperity, then the future of Europe is exposed to high risks.

Therefore, we should connect this vision we have on the EU with the vision we have for our youth. 

Now we can expect a period of intense reflection and decision making regarding the European Union. It is not only due to the Brexit issue, but also to the preparation of a new EU budget for the post-2020 period and the rethinking of some European policy instruments, to make them more efficient and results-orientated.

Romania is particularly interested in taking an active part in this process of reflection over the next few years, as it will be holding the presidency of the European Union Council during the first semester of 2019.

I would like Romania to be a testament to the consistency in its vision, and to the freshness it can bring to the European Union, on this occasion. However, this will require it to be involved in the whole process, starting from now.    s 

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