The National Bank of Romania (BNR) on Thursday, 25 June, launched the study Financial Sustainability – From Deficits to Nominal Convergence, the second volume of the Economic@BNR project, initiated and coordinated by BNR Deputy Governor Cosmin Marinescu. The publication aims to address the economic policy and reform challenges shaping today’s economic debate while providing a reference framework for public policymaking and a better understanding of Romania’s economic trajectory.
Against the current backdrop of heightened uncertainty, overlapping geopolitical risks and domestic political tensions, the volume, which brings together contributions from NBR experts, offers what is arguably the most comprehensive assessment of the imbalances and opportunities facing the Romanian economy. It promotes a comparative approach regarded as essential for moving beyond procyclical policies that have, over time, exacerbated macroeconomic imbalances and for informing Romania’s public policy priorities in the years ahead.
The study highlights both the strengths and the vulnerabilities that will shape Romania’s regional and European trajectory, while warning that the quantitative progress achieved in recent years is no longer sufficient to sustain long-term development. The authors argue that Romania must move towards a new stage of qualitative adjustment, centred on restoring economic and financial balances, reducing structural gaps and strengthening the institutional capacity to implement reforms.
“As Romania advances on its European path, it needs clear objectives and national projects implemented consistently, with the key challenges being the consolidation of public finances, financial sustainability and a return to the path of robust economic growth. We must be convinced that financial sustainability is the essential prerequisite for ensuring macroeconomic stability and supporting the economy’s long-term development,” said NBR Deputy Governor Cosmin Marinescu.
The volume is structured into ten chapters and adopts an integrated approach to the main macroeconomic vulnerabilities, bringing together public finances, financial discipline, the external position, public debt and nominal convergence in an effort to explain how these imbalances interact and shape the Romanian economy’s development prospects.
Throughout its ten chapters, the study examines:
- the sustainability of public finances, by assessing the structural pressures on the budget deficit and the conditions required for the lasting correction of fiscal imbalances;
- budget revenues, from the perspective of strengthening tax collection capacity to support fiscal consolidation and enhance the sustainability of public finances;
- public expenditure, with a focus on the allocation of budgetary resources and the need to increase funding for education and healthcare;
- imbalances in the social security systems, analysed through the lens of the contributory principle, financial sustainability and their impact on budgetary balance and social cohesion;
- state-owned enterprises, from the perspective of corporate governance, financial discipline, uneven performance and dependence on public financial support;
- the constraints facing private companies, in relation to economic resilience and access to finance, amid persistent capitalisation deficits and payment arrears;
- the financial and banking system, analysed in terms of its level of development and its capacity to intermediate financial resources in support of investment and economic growth;
- external imbalances, reflected in the evolution of the balance of payments and the dynamics of external indebtedness, against the backdrop of persistent twin deficits, identified as a major vulnerability of the economy;
- government public debt management, in the context of its rapid increase in recent years and the need to preserve sustainable financing capacity;
- nominal convergence, examined alongside real convergence as essential dimensions of macroeconomic consolidation and financial sustainability.
The analysis also outlines a number of policy priorities, stressing that fiscal responsibility is the cornerstone of sustainable fiscal consolidation, alongside policies that foster productivity, innovation and the economy’s growth potential. The authors also highlight the importance of improving revenue collection, continuing investments financed through European funds, reforming the public pension system based on the contributory principle, strengthening financial discipline in both the private sector and state-owned enterprises, deepening financial intermediation, and strategically promoting exports in order to reduce external imbalances.
In conclusion, the authors argue that financial sustainability cannot be achieved through isolated adjustments, but rather through coherent public policies, fiscal discipline and the consistent implementation of structural reforms. In this vision, nominal and real convergence must advance in parallel, while the adoption of the euro is presented as a strategic national project capable of accelerating Romania’s economic and institutional maturity, deepening European economic integration and strengthening the country’s resilience in the face of future challenges.
Economic@BNR is a project dedicated to promoting economic knowledge and fostering dialogue among experts, academia and the wider public by integrating multisectoral perspectives. Through this new volume, the project continues to support the development of financial education, contributing to a better understanding of how economic policy decisions can ensure financial sustainability and underpin Romania’s long-term development.
Published in both Romanian and English, the volume is also available in electronic format and can be accessed here: Financial Sustainability – From Deficits to Nominal Convergence.
