Mugur Isarescu: You can't build highways with deficit in the pension budgetUpdated: 04-03-2010 | Financial and Banking

Highways cannot be built in Romania in the conditions of the significant deficit of the pension budget, BNR governor Mugur Isarescu considers. "At present you cannot build highways with a deficit at the pension budget which absorbs all available sums from the central budget," BNR governor, quoted by Agerpres, declared in Timisoara on Tuesday. In Isarescu's opinion, people talk about pensions "as though there were a functional pension fund which does not exist in fact. There is only a pension budget."According to him, pensioners are not familiar with reality when they ask for higher pensions because they paid their social contribution from salaries."There is a confusion between the notion of pension budget and that of pension fund. It is not true that pensioners receive now their lifetime contribution. I am now paying contribution for my father and my son will pay it for me, from his salary. Pensioners are not paid from a fund accumulated from what they paid, but from the contribution of the active population at a certain moment. The money paid by the present pensioners from their salaries was not accumulated anywhere to set up a pension fund" the BNR governor explained.

To grant credits is a drama, to take them is catastrophe

According to the BNR governor, the sustainability of the pension system depends on contributions and the latter depend on the number of contributors. If there are no sufficient contributors and contributions, you can give money only from loans, Isarescu showed."When you make a loan you create debts and have to pay interest and return the money. All these lead to debates toward the financial not social aspect, although people talk about the social aspect. The financial aspect is catastrophic because our pension system already has a deficit of 1 billion 600 million euro. If the present unsustainable system maintains we could reach a deficit of 6 billion euro as you can feed if only from the central budget or from other taxes," Isarescu added.The BNR governor declared that Romania's economic situation will be better when financial installments from IMF are over. However, the BNR governor is convinced that to "give a credit is a drama but to take one is a catastrophe."Mugur Isarescu was at the Western University of Timisoara on Tuesday, where the BNR program "Open gates days for economy students," the 2010 edition.