about us | newsletter | contact | archive | members area
Bogdan Nitulescu, Tremend
Cryptocurrencies volatility is a big problem»
  News:      POLITICS   |   ECONOMICS   |   ENERGY   |   INVESTMENTS   |   APPOINTMENTS   |   GREEN   |   INFRASTRUCTURE   |   REAL ESTATE   |   AGRIBUSINESS   |   DRIVING   |   CITY LIFE   |   EVENTS   |

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.



COMMENTS
There are 0 comments:

 
ADD A COMMENT
 
Name
Email
Comment
Validation Code
   
 
 

0 Comments  |  1020 Views
Daily Info
Smart city is not a fad, it's a necessity

In June 2018, the ranking of the most "smart" cities in the world was published. In other words, the most advanced cities in terms of human capital, social cohesion, the econo...

Ondrej Safar, CEZ Group: "Romania can become a hub for international smart solutions providers"

"We are already in the digital age, so the upward trend of implementing smart solutions is inevitable in all areas," he tells The Diplomat-Bucharest. "Especially in terms of u...

Telekom Romania, a strong supporter of Smart City development in Romania

Just like many other countries in the world Romania is now facing an unprecedented growth of the urban population, which can be both beneficial and detrimental for the society...

In the industrial era, the fight was for finite material resources. Not anymore

Now organizations fight and develop themselves for and around their talent. In a nutshell, getting ahead in today's business world is all about attracting and inspiring an e...

Richard Sareczky, Mol Limo: "We look at expansion locations across CEE including Romania"

Consumer mobility behaviour is changing, leading to up to one out of ten cars sold in 2030 potentially being a shared vehicle and the subsequent rise of a market for fit-for-p...

 
 
   
advertising

advertising

advertising

More on News
President Iohannis urges Romanians to be more united, stay involved in modernizing Romania

Romania's President Klaus Iohannis urged Romanians in France to be more united and stay involved as much as they are now in helping modernise Romania.

1 Comment

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.

2 Comments

Revolut gets European banking license

Fintech startup Revolut is now officially a bank. While the startup initially expected to get its European banking license during the first half of 2018, the company has fi...

2 Comments

The Romanian labour market needs a well-thought approach, says FIC

The Foreign Investors Council (FIC) has signaled in the past 2-3 years that its members are anticipating increasing strains on the Romanian labour market because starting w...

2 Comments

Dacia receives 115.8 million RON in state aid from the Finance Ministry

The Romanian Finance Ministry has signed five more grant agreements under the state aid scheme, and among the beneficiaries are Automobile Dacia, with RON 115.8 million.

2 Comments

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...

OTP Bank Romania signs investment funds distribution deal with Eurobank Fund Management Luxembourg

OTP Bank Romania signed a partnership with Eurobank Fund Management Company (Luxembourg) for the distribution of investment funds in Romania. Thus, from December 1st, OTP B...