-0.7 C
January 17, 2022

Ex PM Stolojan: For the Romanian economy, risks come only from abroad

Romania ranges “somewhere between 6 and 7” on a 1 to 10 scale where 10 means recession, former premier Theodor Stolojan said for the Money Channel. In his opinion, the Romanian economy should fear only risks coming from abroad, which may affect export and capital flows.

“Let’s not forget it: Romania has a small public debt, but an external debt, contracted mainly by the private sector, which reached EUR 97 bln. Hence, any malfunction in the flows of capital for refinancing or payment of this debt on term would certainly cause trouble,” Stolojan said. For Romania, the most serious risk is to fail meeting its 3.5 pc economic growth target set for next year, up from 1.5-1.6 pc this year, which would make it very hard for the country to curb the budget deficit from 4.4 pc in 2011 to 3 pc in 2012, especially during an electoral year, he added.

The second risk is the blockage of capital flows because of external reasons, which would pose problems to paying or refinancing Romania’s external debt. The third risk, depending on previous ones, is a deterioration of bank loans, because of an economic growth slowdown or stagnation.

The former premier believes that Romania does not necessarily need austerity measures from now on, but rather it must be careful with its spending and the destination of investments, because the effort must be concentrated on productive investments.

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