Gov’t-BNR meeting in Dragnea’s office concludes that price hike was caused by external factors. No crisis sign

The Government representatives, including PM Viorica Dancila and Finance minister Eugen Teodorovici, have met the central bank governor Mugur Isarescu and vice-governor Florin Georgescu on Thursday to talk about inflation and ROBOR rise. After the three-hour encounter that took place in the office of Chamber speaker Liviu Dragnea, the conclusion, announced by Dragnea’s cabinet, was that price hike had been caused by external factors.

„During the meeting we had a constructive dialogue on the situation and the predictable evolutions of the economy, focusing on the influencing factors of the inflation rate, as well as on the inflation’s perspectives for 2018 and 2019. The conclusion was that great part of the price hike reported in the past months had been caused by external, exogenous factors reported to the Gov’t, BNR’s action,” reads Dragnea’s press release.

„To ensure the inflation will stay within the rate scheduled for the end of 2018 and the coming period, it has been agreed that an efficient and balanced mix of monetary and fiscal-budgetary policies must be enforced. The permanent, open dialogue, based on professional arguments, in compliance with the authorities of each institution, between the Government and the National Bank of Romania will allow the achievment of this target. The discussion has validated the arguments on enhacing the macroeconomic stability and predictability, as well as the existence of some clear premises to increase the nominal, real convergence with the European Union,” the release added.

Liviu Dragnea was also the one who made statements after the meeting, and not the prime minister.

“There are external factors that have a massive contribution to the rise of inflation: gas, energy, oil,” the ruling Social Democrat Party leader said.

Moreover, he stated there is no sign that any crisis is ahead Romania.

„Our joint opinion is there is no sign that Romania is on the verge of crisis or that any crisis would reach Romania. I said from the start that there is no need for a mediation between BNR and the Government, there is no conflict. I told Mugur Isarescu that, contrary to what some high ranking officials or less high ranking are saying in the public space, PSD has no intention to control BNR. The economic forecast was good, BNR didn’t reject it,” Dragnea said.

Although FinMin Teodorovici said before the meeting with the central bank leadership that it had been settled before President Iohannis had offered his mediation, the meeting is not on PM Dancila’s public agenda today.

President Iohannis was the one who had brought in the limelight the need for a discussion between the Gov’t and the BNR on the economic issues last week, even offering to mediate such an encounter.

In retort, the Gov’t representatives said back then there was no need for such a mediation, because they are not in conflict with the central bank.

The President eventually met Isarescu and Florin Georgescu on April 25 and was to have a separate talk with PM Dancila on April 27. However, shortly before the scheduled meeting, the premier announced she was not going to Cotroceni for the talk, arguing she felt as she would have been ‘summoned’ by the head of state like ‘a pupil by the teacher.’

The move prompted President Iohannis to ask for Dancila’s resignation.