| ROMANIA AND EUROZONE ISSUES 29/04/2010 |
| (2010-04-29) |
| Last updated: 2010-04-30 17:35 EET |
The team of experts is analyzing the extent to which Romania is fulfilling its obligations, set by the country's 20-billion Euro stand-by loan agreement with the three institutions, signed in 2009. In June, the IMF is set to decide whether or not Romania will receive the 5th instalment of this loan, consisting of some 850 million euros. The Government in Bucharest need not worry about the upcoming instalments, Isarescu believes. He also claims that Romania's biggest issue is the fact that budget expenditure, now adding up to 40 percent of the GDP, by far exceeds incomes. The head of the central bank also provided a solution to this:
“We should save money from social and current state spending, and put it to use in capital spending. This will create jobs and, eventually, improve the condition of income and social spending alike. You cannot afford social spending when you have a weakened economy.”
Isarescu also claims that he does not favor raising taxes, as in times of recession, such measures would give the country even bigger economic grief. Dominique Strauss Kahn, the head of the IMF, warned of a possible spread of the effects of the crisis in Greece onto other European countries. Talking about this warning, the Romanian central bank's governor said that such an effect is imminent, but will be of low intensity. Here is Mugur Isarescu:
“There will, of course, be an effect. However, Romanian banks that rely on capital from Greece are very well funded, very closely watched and strictly regulations. So I believe any bad influence from abroad will be held to a minimum.”
Other advantages that Romania has, according to Mugur Isarescu, are related to its sizable international reserve and reasonable interest rates.
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2025-04-03
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