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January 21, 2022

Isarescu says best name for crisis is ‘recession’

Prior to his meeting with the representatives of the International Monetary Fund today, National Bank Governor Mugur Isarescu explained, Wednesday night, his repulsion for the word ‘crisis’ in a speech occasioned by a debate inspired by the book ‘From the Big Disorder to the New Normality’ written by his adviser, Adrian Vasilescu, according to money.ro. ‘What does <crisis> mean?’ – Mugur Isarescu asked rhetorically. He stressed out the fact that the word had been often repeated by President Traian Basescu in the speech he gave Wednesday evening. The governor finds the term ‘recession’ to be a more appropriate one. ‘We will eventually come out of this recession. What will be left of the crisis then? A general feeling that things were not always good for us’, Isarescu pointed out.

On the other hand, he explained how the word ‘crisis’ could be interpreted in connection with the national currency: ‘I have seen that the RON is in deep crisis and too stable. When the RON appreciated, exporters almost broke our windows at BNR. So my question is: <When was there a crisis: when the RON depreciated or when it appreciated?>’ In a plastic expression, the governor invited the audience to draw its own conclusions. ‘When will we be out of the crisis? When is there a crisis? When you throw a big party and have one drink too many, or the next morning when you have the hangover?’ he said, adding that the title of his adviser’s book was a very good illustration of what’s going on today. About the situation of the national currency, it appreciated slightly in the first part of the inter-bank trading session yesterday, so the National Bank of Romania (BNR) announced an official exchange rate smaller by 0,71 cents, of RON 4.3396/EUR. The Ron appreciated more against the US dollar, the exchange rate decreasing with 5.3 cents to RON 3.2991 lei/USD, and the official rate for the Swiss Franc went down very little, to RON 3.5957 lei/CHF. Towards the middle of the day, it traded slightly under RON 4.34 lei/EUR.

IMF thinks austerity was exaggerated

The representatives of the IMF have warned that we have cut expenditure too much and that we should start taking measures that can help a faster growth, therefore Fund mission chief Jeffrey Franks is here with the message that Romania should foster economic growth, ‘Evenimentul Zilei’ daily notes. It doesn’t mean that the public sector reforms should not be carried on, especially in the administration and state-owned companies where ‘people are paid for more than they produce’, said economist Bogdan Baltazar.

However, measures that can help economy should be privileged. Most suggestions the IMF makes in the latest memorandum speak of a more efficient redistribution of investment sums, the monitoring of the 100 priority projects implemented with European funds and reduction of tax evasion.

The document even notes that the budget deficit target may grow by 0.2 per cent this year, with the difference to be allocated for improving rural and small town infrastructure. All reforms in the area of public expenditure are set to support the economic growth calculated by the IMF at 1.8 per cent in 2012. The growth would also impact the living standard. If infrastructure works develop, there will also be new jobs, meaning that public consumption will trigger a growth in private consumption. In Baltazar’s opinion, a 5 per cent rise would be beneficial for the economy because it would encourage consumption. But it is hard to believe that it will be possible.

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