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January 17, 2022

BNR Governor: International borrowing is proof of responsibility, but the country’s deficits are worrisome

International borrowing is proof of responsibility, but the country’s deficits are worrisome, the governor of the National Bank of Romania (BNR), Mugur Isarescu told a press conference, when asked about the latest loans contracted by the Ministry of Public Finance.

“Worrisome, an element of concern or as you might want to call it, not of panic, however, are the country’s deficits. We are concerned about the size of the deficits. When you have a budget deficit, the second thing you have to do when you find that you have a deficit is to cash in. So you have no money, given that there is always talk about whether there is money. Of course, if you have a deficit you have no money. You think about where to borrow. The second line of reasoning is this: how big are these deficits and what are the availabilities of lei, of currency, with which the internal market deficit can be financed. In my experience, ever since ’92 or ’93,always, every year, Romania has had a greater need for financing, even when it had smaller deficits, than what the internal market could offer. So international borrowing, to refer first to it given that I saw that there is great concern in that respect, is proof of responsibility. We welcomed this success of the Ministry of Finance with this loan, which is big, but it is big because we have big deficits, it is not big because it is so in general, as we also welcomed the loan made in the summer by the Ministry of Finance or the Minister of Finance back then,” said the governor of the central bank.

The BNR governor affirmed that the interest rates were reasonable compared to the size of the deficit that Romania has, in the fiscal – budgetary field, of over 3 percent, and it is necessary to refinance the public debt.

“My message is the following and I clearly state: the budget deficits should scare us, if we want to be scared. For now we can finance them and I might add that, given this dimension of the country’s budget deficits, the Ministry of Finance has succeeded both at the end of last year and in January and at the beginning of February to borrow at reasonable interests,” said Mugur Isarescu, according to Agerpres.

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