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BNR's Vasilescu: Investment is the only solution to Romania's problems

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The solution to Romania's problems can only be investment conducted today so that bigger wages and pensions may be paid tomorrow, Adrian Vasilescu, adviser to the Governor of the National Bank of Romania (BNR), told IBM Finance Forum 2013 on Thursday.

'It will take lots of investors that we could win over by good and stable laws. In the European Union, Romania is ranked 7th in terms of population size, yet 17th in terms of the Gross Domestic Product (GDP), at nearly 130 billion euros,' said Vasilescu.

He said that in order for Romania to reach sustainable economic growth, public debt as well as internal and external deficits have to be reduced, GDP growth should be sped up, employment should reach an adequate level, revenues should be better distributed and there should be a healthy concern with well-done things.

'Increasingly more projections are contributing to stimulating debates on rethinking the use of resources at a time when major risks are threatening prosperity and welfare. Scientists say welfare should be uncoupled from the rise in resource consumption. The current global economy, built on a never-ending increase in the consumption of material and financial resources, is nearing the end of a cycle. How can we overcome the global sustainability crisis? The crisis is visible in social, financial, economic and environmental issues manifesting themselves globally,' said Vasilescu.

He added that any radical change would be possible through global agreements only.

'Given the exhausting and long-going procedures for concluding such agreements, the general solution would be for the national governments, local administrations, corporations and the civil society to identify ad-hoc solutions. How will things be with Romania? The problem of sustainable growth should concern us first of all. At the same time, we will have to bridge more of the performance gap separating Romania from developed countries. But could such tough a battle be waged by a society that is mainly discouraged and, what's more, that thinks and acts in the short run? This is a cardinal question waiting for an answer,' said Vasilescu.

About the global economy, the BNR official mentioned the need for a switchover from the current linear economy to a circular economy, a new system of production and consumption based on the recycling of products that would be discarded otherwise, mentioning the possibility for tough taxation on consumption of resources and materials while substantially decreasing tax on labour.

'There are no trends anywhere in the world. This is dramatic. We can only talk about projections in today's economy. The world is at crossroads; we know exactly what went wrong but we do not know where the world should be headed for. For 40 years we have lived on resources and the crisis of resources is already upon us. The big problem is securing welfare amidst sluggish economic development, with short-term vision being the biggest foe,' Vasilescu said in relation to the latest projections of the Rome Club.

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