BNR Governor: We are at a turning point, we have to maintain financial stability. PM Ciolos –Quality of governance should be improved

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The prospect of a higher budgetary deficit to almost 4% of GDP in 2017 endangers the macro-economic stability Romania has so hardly obtained in the past years and, subsequently, the Romanian economy’s convergence to the euro area, BNR Governor Mugur Isarescu said on Tuesday.

“The prospect of a budgetary deficit of almost 4% of GDP in 2017 will lead to an upward trend for the public debt and reveals us we haven’t learned enough of the principle according to which during sustained economic growth periods we should save money, not spend our reserves,” Isarescu said.

“We are today at a turning point. It is important that we don’t take steps back and deviate from the process of fiscal consolidation and financial stability,” said on Tuesday the central bank Governor Mugur Isarescu during a conference which was held at BNR and attended by Prime Minister Dacian Ciolos, by the ambassadors of Germany and of the UK, the minister of economy, by central and commercial bankers. The event, organized by, had as its central theme the country’s development strategy, regionalization and convergence, reports.

Governor Isarescu:

– Convergence in the euro area can be a beneficial process, a catalyst of reforms

– Let’s not question the economy’s basic principles through opposing initiatives. After the 2008 crisis, we managed to bring the deficit down to 1%. The reserves have increased by EUR 6 billion although the IMF funds were returned.

– The cost at which the state borrows money is at historic lows.

– We have to be realistic. Personally I have never seen greater perils to stability.

– Excellent macro situation is not reflected at the population’s level.

– GDP would be higher if we had an improved infrastructure.

– We face the risk of losing some of the progress so difficultly achieved.

– The law on debt discharge raises several issues. The first house should not be included in this law.

– If the law is approved, the bill on mortgage bonds – approved in December 2015 – makes no sense.


PM Ciolos: A government with a limited mandate may only launch a Strategy


– A one-year term Government may seem out of place to discuss a long-term strategy for development. For a government with limited mandate, the only thing it can do is to launch a strategy.

– First we need to define where we want to go. We need to identify several key elements that help us get where we propose, meaning values and ideals that we uphold.

– In the second phase we must identify the key factors of development: education, health and infrastructure (horizontal factors) but also high technology and IT&C, agriculture, tourism and energy (as vertical factors).

– We want to introduce the concept of territorial development.

– We benefit from various tools by which the State can stimulate the economic development, without making it an interventionist state.

– We want to reduce waste and to improve the quality of governance. An insufficiently capitalised resource is represented by state companies. They can be stimulating factors in key areas.

– We are in the process of fiscal easing, we have a good macro-economic situation and the photography at this moment can lead to conclusions that we can reap the results of this state of the economy. However, surprise or uncontrollable events may appear that would make us pay dearly for possible irresponsibility.

– The law on debt discharge must respond to those who need it. “The Government in essence supports the wise solving of real social cases and urges the involved players to show solidarity so we can manage to have a good law in the end, which should respond to the expectations of the people who really need it, but to avoid creating through this law benefits for some speculators, a law that would affect the confidence in a state that retroactively changes the rules of the game, which risks affecting, at the same time, in a radical manner the access of some new generations of youth to homes, including by blocking or making less credible some programmes that have proved to be successful so far, such as the First Home Programme has been,”

– There is a huge public expectation for rapid wage increases. I understand those expectations and we need a wage re-balancing, but it must be done rationally, based on our resources.


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