mugur isrescu : 30 years of partnership between the world bank group and romania speech by mr mugur isrescu, governor of the national bank of romania, at the 30 years of partnership between the world bank group and romania event, bucharest, 7 november 2022. * * * vice president bjerde, directors vincelette, akhalkatsi and karadsheh, prime minister of romania, vice - chairman of the senate, vice - chairman of the chamber of deputies, presidential adviser, your excellencies, ladies and gentlemen, next month we will celebrate the 50th anniversary of the accession of romania to the world bank and the international monetary fund ( imf ) in 1972. romania was the first among the countries of the former communist bloc that joined the international financial institutions. unfortunately, during the 1980s the authorities in bucharest had weakened the relationship between romania and these two institutions, almost close to severing all ties. the normalization of the relationship, after the fall of the communist regime, led to a new beginning. the opening of the world bank's office in october 1991 – the moment we are celebrating today – signifies a milestone that marked the start of a new historical point of reference in romania's relations with the world bank and our transition towards a market economy. the 1990s were perhaps the most difficult ones. we had benefited from the direct support of the imf and the world bank. i recall that, shortly after my appointment as governor in september 1991, i received, from a world bank expert, the first report regarding the transition from a mono - banking system, common to a centrally planned economy, to the two - tiered banking system ( central banks – commercial banks ) we have in place today. truth be told, if i were to mention all the partners and friends from the world bank, with whom i have worked over the past 30 years, i would exceed my allotted time. the world bank provided support on multiple fronts. this has been highlighted by the previous speakers and i will not repeat what has already been said. however, there is something that i would like to emphasize. the transition from a centralized economy to a market economy entailed not only loans and financing, but also new laws, building new institutions and good practices. access to the world bank knowledge and expertise helped romania to implement the reforms that followed. 1 / 2 bis - central bankers'speeches in this context, i would mention two of the world bank's programs,

will reduce inequality, but what i would like to emphasize is that in low income and developing countries in general, the most important factor in reducing inequalities stays within the national authorities competencies. proper economic policies must be implemented in order to ensure inclusive economic growth, which generates the reduction of inequality. as it was very well underlined previously, households in romania borrow more than the inhabitants of peer countries. however, credit to low - income people does not come from banks, where they are not eligible. they resort to non - financial institutions instead, where looser credit standards come at the cost of higher interest rates. adequate economic policies will help increase the credit worthiness level of low - income citizens, which then can apply for sustainable loans. also, good economic policies means an increase in the quality and complexity of manufactured products within an inclusive economic growth. it means higher research and development expenditures that will determine an increase in the supply of medium and high tech goods. the global economy is still in a favorable position, albeit decelerating, while the uncertainty is rising. new opportunities, but also new risks and new challenges emerge, such as brexit, the trade and currency war, the cold war of technology, the debt crisis, money laundering, climate changes, higher inequality. all these aspects must be addressed as complementary to current policies. besides the discussions that took place here, related to the soundness of the financial sector and the need to have financial services widely accessible, i would like to underline two main points, in which i strongly believe. 2 / 4 the first one is that “ there is no financial inclusion without social inclusion ” as we look at the development indicators, we can notice, on the one hand, that significant quantitative progress have been achieved in reducing the worldwide poverty across countries. one the other hand, however, there are still important and rising differences related to the living standard, healthcare, education, sanitary conditions within the countries. inequality among the citizens affects their living standards, state of mind and the democracy itself. interest in social spending issues has risen globally over the last decade. the imf has voiced increased concerns about rising inequality, the need to support vulnerable groups, to address demographic, technological and climate developments. in their 2019 report, social spending is mentioned as a key policy in maintaining social and political stability. even companies seem to intend to change their strategy. after being accused of an obsession with short - term earnings while neglecting investment, depressing wages and