The National Bank of Romania (BNR) doesn’t have an optimistic vision regarding this year’s inflation, but nor does it have a pessimistic one, Governor of the BNR Mugur Isarescu stated on Thursday in the meeting organised by the Economic, Industry and Services Committee of the Senate.
“I want to mention in front of the Committee and in front of all those who listen that we try not to be optimistic regarding inflation. (…) We are not pessimists neither. We believe that we can control things in certain conditions, I’ve listed them here. We believe that we have several new instruments at the National Bank, the Romanian society, too, compared to 10 years ago, but we are not optimistic in the sense that we dream of something . We try to be realistic. We are cautious. Our presentations and our estimations are prudent, and they are in fact conditioned by our capacity and that of other state institutions to control the risks that are lurking ,” Mugur Isarescu said.
“Real inflation shielded by fiscal measures”
Real inflation was last year shielded by tax measures such as the VAT cut, and if we did the numbers excluding the fiscal impact, the inflation rate would not have been that deep in the negative in the first half of 2017, governor of the National Bank of Romania (BNR) Mugur Isarescu said at the meeting organized by the Senate’s Committee on Economy, Industries and Services.
“We had a negative inflation for the most part, almost half of 2017, just as in 2016, but as I was telling you, excuse me if maybe I don’t use the best suited word, real inflation was shielded by fiscal measures, by the VAT cut. If we calculated the inflation rate without the fiscal impact we would find that it wasn’t that negative so to say, in the first half of last year, it was even positive. These are exogenous factors,” Isarescu said.
He explained that apart from discussion, or dialogue, and finding a mix to keep the balance of economy under control, BNR can do nothing about administered prices or tax policies.
The head of the central bank said that inflation has been low in 2015, 2016 and 2017, below BNR’s targets, mentioning that low inflation was also the result of the fiscal policy measures.
The annual inflation rate was 3.3 percent at the end of 2017, against the backdrop of food prices going up 4.07 percent and of non-food items growing 4.11 percent more expensive. Service prices increased by 0.22 percent.
The National Bank of Romania revised upwards to 3.5 percent the inflation forecast for end-2018, and estimates an inflation rate of 3.1 percent for the end of 2019.
“Committee on Romania’s switchover to euro aims to prepare process, win popular consensus”
The committee in charge with Romania’s switchover to the single European currency, the euro, aims to prepare the process and win popular consensus, Governor of the National Bank of Romania (BNR) Mugur Isarescu told a meeting hosted by the Romanian Senate’s Committee on the Economy, Industries and Services, stating himself in favour of the approach.
“[About] the national committee preparing Romania for a switchover to the single currency: I have seen the draft emergency ordinance. I have to say that I signed it after having been discussed with the members of the Board of Directors and I understand two things that I find essential. One: this committee suspends the work of another committee, so it is not just our committee, which, I have to say, is a purely technical committee. Discussions there were about how to provide Romania with the banknotes at moment X. So there are also very detailed technical matters. The governmental committee on the switchover, co-chaired by the prime minister of Romania and the governor of the National Bank has been suspended for as long as the current committee is functioning. I understand the following thing: its actual purpose is preparing the process and winning national consensus. I am for such approach,” Isarescu said.
He said that he agrees with the approach because preparation for a national consensus involves the actions of several organisations and political parties.
“I led, when I was the prime minister, a process of mounting national consensus until 2000 for EU integration in 2007; I worked on a strategy in that direction, and I know how laborious getting a national consensus is. BNR had no power to do it,” said Isarescu.
The second reason regards the legislative steps that need to be established in this process. For example, the BNR statutes would need 20 amendments to be able to integrate with the Euro area.
Dragnea: BNR Governor responded to my letter but I didn’t get to read it. How the Social Democratic leader explains the absence of PSD MPs at Isarescu’s hearing in Parliament
Social Democratic Party (PSD) President Liviu Dragnea stated on Thursday, in Focsani, that he received a response to the letter he had sent to the Governor of the National Bank of Romania (BNR) but he did not get to read it, claiming that the PSD MPs were not present at Mugur Isarescu’s hearing in Parliament probably because they no longer have confidence.
“I talked with the BNR Governor yesterday. He phoned me, and he told me he sent an answer to my letter. I’ll study it today or tomorrow, because I didn’t have the time, and then I’ll make public what I transmitted to him too, in detail. Monetary policy must be achieved following constant dialogue with the Parliament and the Government. We’re willing to debate the reason the inflation rate rose and how it influences the re-financing policy and what effects it has on the economic activity in general,” Liviu Dragnea stated in Focsani.
Asked whether PSD MPs boycotted Mugur Isarescu’s hearing in Parliament on Thursday, Liviu Dragnea denied, claiming that maybe the Social Democrats did not trust the BNR leadership’s intentions.
“They may have had a reason. What boycott? We’re not boycotting the BNR. We’ve been supporting it for 28 years. I understand that there’s stability, that it’s the same Governor, but not seeing the answer to the letter and not knowing the BNR’s intention to be part of a programme of support, PSD representatives lacked confidence,” Dragnea added.
Citu on PSD’s absence at meeting with BNR within Senate: Mugur Isarescu was surprised
Sorin Citu, Chairman of the Senate’s Economic Committee, stated on Thursday that BNR Governor Mugur Isarescu was surprised that PSD Senators did not take part in the meeting on inflation. He added that, from what he knows, Liviu Dragnea and the said MPs watched the debate online.
“They were surprised that they’re not here, even though they always summon him and tell him he is hiding and doesn’t want to talk. Today, when he came along with his entire team, they weren’t there. They boycotted the committee. He was only surprised, because he believed they were going to be here and ask him questions. I’ve been announcing this meeting for two weeks. It wasn’t a secret, it was on the website. I know that the ones from PSD, I understood, watched it online. I understood Liviu Dragnea watched it too, but I don’t know more,” Florin Citu told MEDIAFAX after the meeting with Central Bank representatives.