Ahead of the European Council meeting last night, the president said reduced cash flows will hurt Romania’s financial stability.
Romania would be faced with difficulties if parent-banks reduced cash flows in the context of a potential restructuring of the Greek debt, president Traian Basescu stated on the “Henri Coanda” airport, before leaving for Brussels where he is attending the European Council meeting.
The head of state added this was, indeed, Romania’s target during the EC meeting, to ensure the European banks’ cash flows to non-euro zone countries would be maintained. “I reckon it is necessary to take a clear stand so as to cover our funding needs for next year,” the president stated.
According to Basescu, Romania borrowed RON 56bln from the internal banking market this year to cover its budget expenditure and the pension, healthcare and social security system deficit.
“This equals EUR 13.2bln from the internal market, plus another EUR 2bln from the external market. If cash flows parent-banks allot to their subsidies in Romania were reduced, we would be faced with difficulties. We wouldn’t even be able to cover next year’s budget expenditure. This is why we argue the need to maintain cash flows to subsidies in the non-euro zone should be taken into consideration when funds are allotted to banks in the euro zone,” Basescu stated.
“It is vital that cash flows to the private sector be maintained as well for this sector to be able to back the slightest economic growth,” the head of state concluded.