CFA Romania: modifications proposed by Government damage financial system

The Association of Certified Financial Analysts (CFA) warns in a statement released on Wednesday for AGERPRES that the modifications proposed by the Government bring serious damage to the financial system on which the Romanian economy is based and jeopardize Romanians' right to a decent living in old age. 

According to CFA Romania, the recent changes announced by the Government regarding privately managed pension funds - Pillar II, eliminate what is, for the majority of Romanians, the only saving instrument and the chance for a decent living at the age of pension. 

"By the announced measures, the Government is sending a message to fund managers to withdraw from the market, taking into account increased capital requirements of up to 20 times, given that the revenues from administration will also drop dramatically. The possibility to withdraw the contributions paid after the first five years is also a ?poisoned apple.' Under the appearance of the benefits of immediate liquidity, the long-term financial stability of millions of Romanians is affected, and the state creates the prerequisites for reintegrating contributions to the state pillar, without ensuring future pensions. As demographic developments are worrying, such a measure is simply an attack on the long-term wellbeing of the Romanians, and will further fuel the inflationary spiral we are already in, and that will seriously "bite" both from current income and from the life savings of the Romanians," CFA Romania representatives say. 

They point out that through these measures, the Government creates the worrying premise of a substantial increase in the cost of financing the budget deficit, and "these increased costs will be paid by us all, from taxes." 

Moreover, the announced measures for utilities, telecommunications and banks will seriously affect the Bucharest Stock Exchange, whose volumes, of over three quarters, are generated by companies in these industries. Increased cost of bank loans, telecom and utility fees, including excise duties, will substantially erode the daily living of Romanians and limit their access to quality goods and services. 

"We mention that the taxation of the banking system according to the evolution of the ROBOR index, which itself is an expression of the inflation generated by previous measures of this Government, denotes a misunderstanding of the functioning mechanisms of the market economy and creates a dangerous precedent. Considering the lack of consultation with the business environment, preliminary impact studies and the seriousness of these measures for the economy of the country, we consider the building of the medium and long-term vision for the future of Romania and of the Romanians a priority," reads the press release.