Isarescu: Root of crisis almost similar in all CEE countries

The Governor also mentioned that BNR has proven “a benign goodwill” towards banks that have foreign capital.

The causes of the crisis are comparable, maybe even similar, in the case of all Central and Eastern Europe countries, namely an imbalanced and in essence unsustainable economic growth registered during the previous period, a growth based on consumption and on the desire to catch up, on the natural growth in consumption and living standards, National Bank of Romania (BNR) Governor Mugur Isarescu stated at the launching of the “How Emerging Europe Came Through the 2008/09 Crisis” book written by Bas B. Bakker, the head of the IMF’s Emerging Europe regional division, and Christoph A. Klingen, deputy of the same division. “These were Central and Eastern Europe’s natural goals out of the desire to faster integrate in the Western world and the EU. Thus we ended up having an excessive current account growth that should have been corrected. It was difficult to convince anyone in 2005-2006 that you have a problem if you have a current account deficit higher than 5-6 per cent,” the BNR governor stated, according to According to him, there was an excessive financing of development and especially of consumption from foreign investors, “not just through loans, but also through FDI based on precarious statistics.” “Now we see how precarious it was. We all included there both tradeable and non-tradable direct investments, and under non-tradable in unproductive sectors we included land purchases, many of them speculative, which cost us a lot. We lived under the illusion that we have enormous foreign direct investments. Not all of them went where they should have, not all of them had the capacity to correct themselves,” Isarescu explained. Likewise, he underlined the fact that politicians have to understand that economic growth periods do not last forever and some of them will pay the costs of the needed adjustment, especially if society and even the political class will not learn the notion of sustainable economic growth.  The BNR Governor also believes that what the Romanian society needs is for the public and politicians to understand what sustainable economic growth means Mediafax reports. Also, he considers that BNR has proven “a benign goodwill” towards banks that have foreign capital, forgetting that they have their own governance and the battle for market share can lead to dangerous rhythms.

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