The National Bank of Romania (BNR) Governor Mugur Isarescu said on Tuesday, at the Parliament Palace, that the unsustainable growth can bring gains only on short term, with successive recessions as consequences. Isarescu warned spectacular growths lead to proportional falls.
“Our recent experience during the exuberant expansion in the years before the global crisis was followed by a deep recession is fully revealing. For this reason, although it may seem paradoxical, it is preferable a moderate growth, e.g. of 3.5%, but over several consecutive years. This increase is preferable against spectacular leaps followed by contractions at least as large. The only way a society can benefit simultaneously by an advance linked to the growth potential could be done through structural policies that lead to permanent gains in productivity,” Isarescu said.
In his speech, the BNR Governor warned that macro-economic stability is not caprice and there’s no substitute for reform.
Isarescu gave as example the tax easing measures, adding that governments do not have European principles as their priority. He added that the intervals of economic growth are meant to cut the public debt, not to build new deficits. On the other hand, entrepreneurs feel comfortable in predictable economies, where the rules of the game are observed. One of the rules is fiscal discipline, Isarescu said.