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March 1, 2021

Isarescu: Romania, experiencing crisis for several years at salary raises by 30 pc

The Central Bank governor said on Thursday that due to IMF agrement, the country managed to switch from a negative image country to a positive one.

Romania may experience crisis for several years still if we consider salary raises by 30 per cent, Mugur Isarescu, Governor of the National Bank of Romania, said yesterday in Iasi, during a speech delivered at Alexandru Ioan Cuza University. BNR official said, in relation to the economic data of the first three months of 2009, that “is much beyond our expectations, in the sense that economy answered well”.

In his turn, the Advisor of BNR Governor, Adrian Vasilescu says that salary raise in 2009 should not exceed the inflation rate level, estimated at 4.4 per cent for this year, adding that unjustified raises should be avoided in order not to refuel inflation. Asked whether the government is able to handle well political pressures towards salary raise, during an electoral level, Vasilescu said that the International Monetary Fund (IMF) shall be careful in corelating indicators and they may put pressure to avoid this.

Regarding the adjustment of the budget deficit, Isarescu mentioned that this should not be an excessive measure. “We need to be careful as the adjustment of the budgetary deficit not to be an excessive one”, BNR Governor indicated. He added that within the deficit adjustment measures, the central bank included the exchange rate as well, but without permitting a strong depreciation. Mugur Isarescu added added that from an inflation rate, the peak of the crisis was overcome. BNR did not aim financing the budget deficit, directly or indirectly, but to secure liquidity in the monetary market, and following a “difficult time”, a state bond market has emerged, “sufficiently deep”, according to the central bank governor. He added that BNR could not finance directly “even a cent” of the budgetary deficit.

Monetary indicators for the eur zone

Romania could adopt EUR in 2014, considering a sound reserve of the National Bank, as against GDP, Mugur Isarescu, BNR Governor, said. “If we want to adopt EUR in 2014, then, in 2012, Romania needs to have a minimum RON and foreign currency reserve towards 2 – 5 per cent”, BNR Governor explained. He udnerlined that the RON has reached a sustainable level. RON depreciated, in the first part of Thursday inter-banking session, BNR calculating a reference rate at RON 4.1891/EUR 1, by RON 0.0317 more than during the previous day, RON 4.1574 for EUR 1.

BNR official believes that the national currency could have depreciated to more than RON 5 for EUR 1 if Romania’s funding gap had not been convered, but after the conclusion of the agreement with IMF and EC, such an option should not be “seriously” considered.

IMF did not release the intent letter for not distorting the market

The International Monetary Fund (IMF) does not publish the letter of intent concluded with Romania for not distorting the market, BNR Governor said, adding that Romania managed, in five months, to switch from a negative image to a positive example. “There is a general opinion that this agreement, which was a pioneering one, could apply to other states as well. In five months, Romania managed to switch from a negative image country to a positive one”, Isarescu said in Iasi.

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