about us | newsletter | contact | archive | members area
Nicolae Ghibu, Certsign
Regulations will come gradually and will cover all areas»

No Euro in the next three years, says Central Bank Governor

Central Bank Governor Mugur Isarescu recently told The New York Times that Romania's target of joining the Euro zone in 2015 is now "out of the question." Nevertheless, he argued that trying to meet the criteria to join – including keeping the budget deficit below three per cent of GDP – was good discipline.

November 2012 - From the Print Edition

Isarescu added that maintaining its own currency had given Romania the flexibility to set interest rates, control liquidity and allow the currency to depreciate to help rein in the deficit. In the absence of control over monetary policy, he noted, Euro zone countries like Greece are forced to rely primarily on fiscal policy: taxing and spending. "Of course there is a backlash and disappointment because EU accession was seen as a panacea," he said. "The dreams were too big."
In Romania's case, maintaining its currency, the lei, has made its exports – two thirds of which go to the Euro zone – more competitive and given it a lower cost of living that has made the country a sudden draw for highly qualified workers from struggling Euro zone countries.
The news comes one month before general elections in Romania, at a time when previously assumed economic and financial moves in the EU context might be subject to change once a new Government is in place.
The New York Times analyzes the current economic situation, calling Romania "hardly immune from crisis. Successive governments have grappled with a backlash against austerity. And the political turmoil that ensued when the Government of Victor Ponta pressed, and failed, to impeach President Basescu this summer shook investor confidence."
Prime Minister Ponta agreed with Governor Isarescu, and was quoted by Mediafax as saying: "I believe it is important to continue our efforts to meet the convergence criteria, namely those regarding the budget deficit and inflation. However, we have to think very carefully about the ‘real' criteria, those referring to the purchasing power of Romanians versus Euro zone countries." Ponta said that in his opinion Romania should adopt Poland's approach to the issue. "Romania should follow Poland's path, namely being a supporter of a united Europe and wanting to enter the Euro zone, but no longer with 2015 as a fixed target."
Before entering the Euro zone, a country has to meet the economic criteria included in the Treaty of Maastricht (a budget deficit of under three per cent of GDP, a public debt of maximum 60 per cent of GDP and an inflation rate that should not go over 1.5 per cent of the average of the best performing countries in the Euro zone).
Economists said Romania had avoided the profligacy that has unhinged the Greek economy, thanks in part to tough austerity measures beginning three years ago. The country slashed public sector wages by 25 per cent and raised its value-added tax to 24 per cent from 19 per cent, helping stave off budgetary shortfalls.
Romania's budget deficit amounted to about two billion USD, or 1.2 per cent of gross domestic product, in the first nine months of the year, compared with 17 billion USD, or five per cent of GDP, in Greece. The New York Times says growth this year in Romania is expected to be about one per cent, according to the Government, compared with an expected contraction of more than 6.5 per cent in Greece.

There are 0 comments:

Validation Code

0 Comments  |  986 Views
Daily Info
OTP Bank Romania posts 15 million Euro profit at the end of Q3 2018

OTP Bank Romania recorded a consolidated after-tax profit of 15.09 million Euro, in the first nine months of the year, almost twice as much as in the base period.

Black Sea Oil & Gas and Transgaz sign 15-year contract for the MGD Project gas production transmission into the NTS

Transgaz and Black Sea Oil & Gas signed the gas transmission contract for the transport of the Midia Gas Development Project (MGD Project) production into the National Transmi...

Almost 90 per cent of industrial and logistics stock is condensed in cities with highway access, says C&W Echinox

Romania's industrial and logistics market is currently benefitting from its best period in history, both in terms of supply and demand, with development being condensed in a n...

Meet the finalists and the winners of the first Automotive Awards Gala by The Diplomat-Bucharest!

Automotive Today powered by The Diplomat-Bucharest organizes Automotive Forum & Awards for Excellence Gala 2018 on 13 November at JW Marriott Hotel in Bucharest - Constanta Ba...

The second edition of Hacking Health awards three digital innovation projects for the Romanian health system

Hacking Health 2.0, the most important health hackathon in Central and Eastern Europe, took place this weekend in Bucharest at the initiative of Johnson & Johnson Romania, imp...







More on News
ArcelorMittal receives binding offer for European assets from Liberty

British-owned Liberty announced a conditional agreement to buy four European steel plants, employing more than 12,500 people.

EBRD cuts economic growth forecast for Romania

Romania's economy will grow by 4.2 per cent this year and by 3.6 per cent in 2019, according to the most recent forecast released by the European Bank for Reconstruction an...

MOL Group posts 835 million USD profit for the first nine months of 2018

MOL Group announced its financial results for the third quarter of 2018. With a net profit of 323 million USD in Q3, the company reached a profit of 835 million USD for the...

Black Sea Oil & Gas and Transgaz sign 15-year contract for the MGD Project gas production transmission into the NTS

Transgaz and Black Sea Oil & Gas signed the gas transmission contract for the transport of the Midia Gas Development Project (MGD Project) production into the National Tran...

Corina Popescu is the new CEO of Electrica

The Board of Directors of Electrica, one of the most valuable companies where the state is the main stakeholder, has agreed to end the collaboration with its CEO Dan Catali...

Violeta Luca is the new general manager of Microsoft Romania

Microsoft announces the appointment of Violeta Luca as general manager for operations in Romania starting in November this year. She joined Microsoft Romania for the first ...

Belgian real estate developer WDP to launch new 75 million Euro projects in Romania

WDP kicked off its Investor Day in Romania by announcing an additional investment volume of around 75 million Euro, amounting to some 130,000 sqm in property, both through ...