ECONOMY FINANCE&BANKING

BNR Governor Isarescu: Deterioration of budget deficit concerns us, I hope it doesn’t happen

The National Bank of Romania (BNR) is concerned about a deterioration of the budget deficit, but it is not frightened, and I hope this thing doesn’t happen, Governor of the BNR Mugur Isarescu told a press conference on Wednesday.

“Of course, a deterioration of the budget deficit concerns us. I hope it doesn’t happen. We expect constructive discussions with the Finance Ministry, with the new Finance Minister, with the Government. We already had consultations with the Fiscal Council; We haven’t changed our standpoint. We told our standpoint even in English to foreign agencies ‘contain and gradual adjust.’ Thus, we don’t rush in to increase taxes or take brutal measures to affect the economic growth because if we were to do so, we would continue, in fact, the pro-cyclical policy,” Mugur Isarescu said, when asked whether he is worried about the effect of pensions’ increase over the budget deficit.

He mentioned that it’s hard to get out of a pro-cyclical policy, but not impossible.

“If I said we are concerned it doesn’t mean that we are frightened. Don’t convey this message. It’s a message of vigilance, of focus on finding some viable solutions, that doesn’t accentuate unbalances,” Mugur Isarescu stated.

When asked about the volatility of the leu – euro exchange rate, the BNR Governor said that the development of the leu currency has been more stable than the Hungarian forint (HUF), which moved by 3 percent against the leu currency, which fluctuated by 1 percent over the last month.

Finance Minister Florin Citu stated on Wednesday that, so far, the budget execution is worrying, 10-months execution will also register an increase in the deficit.

The general consolidated budget ended the first nine months of this year with a deficit increasing to 2.6 percent of the Gross Domestic Product (GDP), 26.97 billion lei, respectively, a figure which represents an increase of 6 percent against the same period of last year, the data recently published by the Public Finance Ministry show.

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