Mugur Isarescu, the devourer

When the young Prime Minister Victor Ponta was saying at one point that “the BNR Governor is always right” he meant that pejoratively. Mugur Isarescu is much too versatile and endowed with perverse masks to have reacted directly and bluntly. On the contrary, before the election of the Central Bank’s new Board of Directors last year and especially before last year’s presidential elections, the Governor seemed to be a big supporter of the Social Liberal Union government. A union of parties unprecedented in the country’s modern history. Neither during the interwar period nor even less so in the years of democracy after 1989 had Romania managed to have a political coalition in which two great political currents stood shoulder to shoulder for the sake of Romania’s interest.

In his juvenile naïveté, in the midst of the turmoil of the 2014 presidential elections, Victor Ponta stated about Isarescu: “I am convinced Isarescu wants a new term at the National Bank. I believe that our stability in what concerns the National Bank is a gain. He will probably remain for life if things go well.”

The credulity of the leaders of the Liberal – Social-Democrat coalition (which vanished as if by magic) and of the Head of Government all these years was that the Central Bank will be by the Government’s side in creating and stabilizing a period of prosperity and economic attractiveness for Romania. The attainment of such a goal is not in the interest of the Central Bank. The latter has its “intellectual speed” limitations and does not want headaches.

Especially not now after it just got rid of them. And the irony is that it did so not through its own effort but precisely through the effort of the economic measures through which the government has been spurring the business and even the banking sector ever since 2013.

We have to express ourselves clearly and unequivocally. The National Bank of Romania has obtained no success through its own strength. We said it before. For example, since 2001 BNR has kept targeting the inflation rate (that was the name of the famous reports issued by the fiefdom located on Doamnei Street) until the latter grew tired and surrendered. In other words, the BNR never managed, in all these years, to attain its inflation reduction level at the level forecast. It blamed that failure on all kinds of erroneous actions or measures taken by others.

When, nevertheless, in the second half of 2013 the inflation rate started to drop, the BNR breathed a sigh of relief. In the Q4 report in 2013, Mugur Isarescu was triumphant because the annual inflation rate had dropped to the lower limit of the interval targeted. How was that done? The report spells it out with unbridled pride. Namely: the favourable base effects (of the slumping inflation – editor’s note) were determined by: the poor crop of 2012, followed by an abundant crop in 2013 (with an impact on the price of processed food products in Q4); the lowering of VAT for bread, flour and some bakery products starting on 1 September 2013.

With such successes, Mr. Isarescu was on the Government’s side and was praising Victoria Palace’s reformist mode through which BNR was seeing its goals attained.

Until the government promoted new reforms in order to create a business sector as attractive as possible. We are mainly talking about the Fiscal Code. A document drafted, up to a point, in collaboration with the Central Bank.

However, Mugur Isarescu has been always careful not to come before the electorate with statements, albeit philosophical. With which to show that BNR is in harmony with the Government.

The principle of BNR’s independence and sovereignty is being infringed (!?).

Government officials, on the other hand, did not desist from boasting that the drafting of the Fiscal Code was a work done in close collaboration with the Central Bank. The Finance Minister and the Prime Minister were saying it in early 2015.

They were encouraged by the statements made a year ago by Isarescu himself on the issue of the VAT. In May 2014, BNR Governor Mugur Isarescu was saying that fiscality is even more burdensome than it was in 2012 and was giving as an example the sum that the company whose shareholder he was had to pay to the state in a single quarter.

“I haven’t changed my opinion that it is difficult to do business in Romania. I even find it harder. It’s as if it hasn’t become easier. In a single quarter I paid ROL 3 bln to the state. I find that really too much, maybe it’s just a perception and maybe I am subjective. But seriously. Tax on that, tax on this, tax on profit… When the accountant told me how much the company has to pay as profit tax I almost hung up,” BNR Governor Mugur Isarescu, the shareholder of a winery company, stated.

The BNR official believed that these dissatisfactions reached the Government too and was hoping that both the tax exemption for reinvested profit and the lowering of social insurance contributions would give a boost to the business sector. The two measures have been implemented in the meantime.

Isarescu also stated that the relaxation of the fiscal policy would bring to light some of the grey economy, including unregistered jobs, a fact that will have a positive impact on the budget, as happened in 2000 when the profit tax was lowered from 40 to 25 per cent and the revenues doubled.

When the government has finally taken the fiscality issue seriously and has come up with a draft law that has been adopted in Parliament, Mugur Isarescu is silent and barely breathes-in the government’s and business sector’s arguments. Ironically, the entire business sector backed and backs the Fiscal Code law.

What has Mugur Isarescu done since the government approved the draft law and then Parliament debated and approved the opposition’s amendments?

We said it: he was devouring with difficulty the position he had to adopt.

Hesitant and educated at the occult schools of the globalist West, Mugur Isarescu pounced.

First he “wrote” to the new President who, in front of an ad-hoc auditorium, stated that he cannot promulgate the Fiscal Code law adopted by Parliament on June 24.

After the positions expressed by the business sector against the President’s decision died down, the Governor took off his mask on Friday, July 24, at an updated gathering dubbed “The Governor and his guests.” After engaging in an extensive economic-political verbiage, Isarescu said: “The package of tax cuts is economically and financially inapplicable.”

He did that after he previously scolded (not literally nor directly) the business sector that does not want to listen to the “voice of reason.”

Who is the voice of reason? It consists of the Central Bank (a part of its staff), the Fiscal Council (a ghostly institution whose point of view is expressed only by its president) and international crediting bodies.

Mugur Isarescu: “How could we implement these measures without negotiating with international partners.”

That is true, Governor: What did you do for the Romanian economy with your own forces. Out of your own initiative?

Did you contribute to saving the Romanian banks sold for peanuts in the 1990s? Did you defend the national currency through a coherent policy? Did you have any remorse when the country’s citizens were contracting forex-denominated loans? Did you try to stop the Euroization of the economy or did you promote this confusion between prices and tariffs expressed in two currencies?

You initiated the debates on Romania’s Euro Zone accession and then you devoured it week by week.

You were the co-author of the Fiscal Code and now you devour it.

Just like you are doing with the naïveté of Premier Victor Ponta, who did not manage to become President, in order for you to be Governor for life.

Now you know that will no longer happen.

And you devour everything you can.

In what concerns us, we no longer want to wish you success!