The Independent Analytical Center “Expert Grup” made public its position on the conversion of the emergency loans provided by the National Bank to three commercial banks in 2014-2015 into state debt. The experts underline a number of problems associated with the nature and way in which this decision was taken and the lack of transparency in the decision-making process or the nondemocratic character of the given decision, IPN reports.

In a report, “Expert-Grup” says the decision was taken amid the modest progress made in alleviating the consequences of the banking fraud, while the conversion of the guarantees issued by the Government into state bonds implies also an increased moral hazard. The effective interest rate of 5% on the issued bonds for a period of 25 years does not have economic justification and is ultimately an evident act of social injustice.

According to the experts, the banking fraud is the result of the shortcomings in the corporate governance of some of the banks, the dysfunctions in state institutions, including those responsible for ensuring financial stability and of ill-intentioned decision-makers of state institutions and banks. Consequently, the recovery of the stolen money must be their responsibility. A benevolent government will do its best to shift the given burden namely onto these players. On the other hand, the shifting of responsibility onto the taxpayers is an act of profound social injustice, even if there is an uncertain possibility of covering a part of the debt with assets that are planned to be recovered.

“Expert-Grup,” says that in accordance with the democratic norms, any law must defend the rights and freedoms of the people, while the law of 26.09.2016 on the issuing of state bonds for delivering the Government’s guarantees is more than the opposite. The chosen solution is unjust, inequitable and immoral. Furthermore, the absence of parliamentary consultations and public debates and ignoring of the legal procedures for adopting this law represent a huge abuse on the part of the Government.

On September 26, 2016, the Government assumed responsibility for this draft law that actually envisions the conversion of the guarantees provided in 2014 and 2015 for the loans released by the central bank to Banca de Economii, Banca Sociala and Unibank into state debt.

Besides implementing the legal provisions, the Government resorted to this measure for two important reasons. First of all, it acted so in order to avoid another image blow as a result of the non-fulfillment of the payment obligations to the National Bank, which would have compromised the negotiations on a potential financing memorandum with the IMF. Secondly, this measure ensures the protection of the National Bank’s independence as, if the Government hadn’t ensured the conversion, the bank’s reserve fund would have been in debt and the state, in the person of the Ministry of Finance, would have been obliged to transfer the overdue sum to the central bank.