The Governance Deficit: What Are the Long-Term Risks for the Economy and Society?

For nearly five years, Romania has been undergoing a period marked by the excessive deficit procedure—a situation that, worryingly, has come to be treated more as the norm than the exception. In the Academia de Guvernanță show broadcasted by Profit.ro TV, Alexandru Nazare, the current Minister of Finance, and Carmen Micu, CEO and co-founder of ENVISIA, discussed the root causes of current economic imbalances, emphasizing the need for accountable public leadership, the importance of institutional professionalization, and the necessity for strategic thinking that goes beyond electoral cycles and short-term reactions.

The Budgetary Imbalance – Between Resources, Governance, and Mindset
Alexandru Nazare, Board Member of the National Bank of Romania and President of PAN Europa Romania, highlights that the budgetary imbalance is not merely a matter of limited resources. In short, the problem is not only legal or accounting-based, but also conceptual: imbalance should be the exception, not the rule. Fiscal discipline is compatible with investment—as long as it is upheld. Only by respecting the fiscal responsibility law and existing regulations can there be coherence and transparency in budget execution. “I think it's a matter of resources, governance, and perhaps also of mindset and how we set our goals. […] Somehow, the idea that Romania is in an excessive deficit has become normalized, which I believe is a serious problem. We should set our objectives so that imbalance is no longer the norm, but the exception.”

The Absence of a Formal Budget Closure Procedure
Another major vulnerability pointed out by Nazare is the lack of an institutionalized budget closure procedure in Parliament, which undermines the ability to conduct a thorough analysis of how public funds are spent and reduces visibility on long-term budgetary trends.
Nazare proposes a procedural reform: before presenting a new budget, the previous one should be analyzed—how the money was spent—in committees and plenary sessions.
“We don’t have a budget closure procedure in Committees and in the Plenary of Parliament, like in most other places, including the European Parliament. The budget closure report shouldn’t be just a PDF on the Ministry of Finance’s website. It should be a public document, discussed, debated, and used as a basis for approving the future budget.”

The Need for Political Commitment and Predictability
Nazare criticizes recent derogations from the fiscal responsibility law and stresses the importance of transparent and formal accountability for the figures in the fiscal-budgetary strategy.
“The Prime Minister and the Minister of Finance must take responsibility for the figures in the fiscal-budgetary strategy. […] This commitment has been missing for at least the past two years. And even if it's symbolic, it matters greatly.”
Such commitment is not merely a formal gesture—it is a guarantee of accountability in governance.

Visionary Leadership: Beyond Numbers, a Systemic Issue
Beyond figures and budgets, changing the mindset within public administration and the entire governance system is essential. Carmen Micu, CEO and co-founder of ENVISIA, emphasized the need for public leadership that is responsible, visionary, and predictable. “It is clear that we need leadership willing to take responsibility in a context that has become a systemic issue.”
She also advocates for building a genuine partnership between the economic, academic, civil society, and public sectors—leveraging collective intelligence as a strategic resource.
Nazare supports this view, emphasizing the need to draw on the experience of the private and academic sectors:
“I believe we need to capitalize on existing expertise. There's a gap between the private ecosystem—which creates value and revenue—and public administration. Collaboration and transparency must become the rule, not the exception.”

Reforming the Administrative Mindset
Both Alexandru Nazare and Carmen Micu underline the need for a deep change in the public sector’s mindset. Although dialogue between the administration and the private sector exists, it often lacks concrete outcomes.
Nazare observes that while problems are often articulated, there’s a lack of reaction and transformation into real measures:
“I believe the mindset within public administration—political or not—needs to change, through transparent communication and collaboration with the private sector. Some express their concerns, but these don’t translate into action. There's no response.”
For him, reform must begin with essential questions: What is Romania’s medium- and long-term economic vision? What growth directions are we pursuing? And how seriously are we engaging with our strategic documents?
Although such documents are periodically drafted and presented, in practice they are treated formally, without being effectively integrated into decision-making.
“I looked at a macroeconomic report from two years ago presented in Parliament, which forecasted a reduction of the deficit to 2% by 2025. That didn’t happen. Yet these documents exist—these projections must be taken seriously. Instead of decreasing, the deficit has increased; last year it reached nearly 9%,” he warned.
A country’s economic performance depends directly on the quality of leadership in strategic institutions. “The Ministry of Finance, ANAF, Ministry of Economy—all these decisively influence the economic trajectory.” Nazare sees inter-ministerial collaboration as a weak point, stressing the need for a closer relationship between the Ministry of Finance and the Ministry of Economy.

Professionalizing Boards and Breaking Free from Electoral Logic
Carmen Micu highlights the importance of professionalizing Boards of Directors in both the private and public sectors. “Boards play a fundamental role in long-term strategic thinking. […] These practices must be transferred to the public sector as well.”
The issue is not only technical but also one of mindset: “We need to break free from the four-year electoral logic. Long-term thinking is not optional—it’s a necessity.”
In this context, dedicated training for board members becomes essential. ENVISIA, in collaboration with Henley Business School in the UK, has developed the Postgraduate Certificate in Board Practice and Directorship. This internationally accredited program prepares leaders for the complex challenges of modern governance, with a focus on ethics, strategy, and informed decision-making in times of profound transformation.
Registrations are open until September 5 here.

Romania’s Position in the EU and the Region
In the current geopolitical context, Nazare notes Romania’s passivity in European dialogue: “We need to be more assertive, more present, and I believe we must change the way we operate.”
Likewise, Carmen Micu warns about fragmented governance, lacking a cross-party vision: “There is no coherent leadership, no coherent strategy, and a lack of long-term vision. […] National interest must be cultivated and pursued over the long run.”

Top 5 Takeaways from the article

1. Romania needs a culture of budgetary accountability, not just figures on paper. The absence of a formal budget closure process and the lack of ownership over fiscal strategy erode trust in governance and the effective allocation of public resources.
2. Public leadership must become responsible, predictable, and visionary. Budgetary issues are not just technical—they reflect a systemic leadership crisis where decisions are shaped by electoral cycles rather than coherent long-term vision.
3. Collaboration between the administration and the private sector remains superficial. While intersectoral dialogue exists, it rarely leads to tangible outcomes. The administrative mindset must be reformed so private sector ideas can translate into public policy.
4. Professionalizing boards is essential in the public sector as well. Boards have a recognized strategic role in the private sector, but are underused in public institutions. Without adopting these best practices, public governance remains vulnerable.
5. Romania has regional potential, but lacks a cross-party development strategy. Romania’s weak positioning within the EU and the absence of a coherent economic strategy make it more reactive than influential on the European and regional stage.

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