September 19, 2018

Mugur Isarescu assures that the Cyprus situation will not happen in Romania

On Thursday, the National Bank of Romania (BNR) Governor Isarescu gave assurances that what happens in Cyprus will not happen in Romania. “There are no similarities between the situation in Cyprus and the situation in Romania. Not only are there no similarities, but the differences are huge too. In Romania the whole banking system represents around half the GDP. In Cyprus it is eight times the GDP. The Romanian banking system would have to grow 14-fold quickly and for the GDP to not grow at all, but when the Romanian banking system grew from 20 to 40 % of GDP from 2005 to 2008, the GDP grew by 4 or 8 % per year. The difference is huge. The large differences also concern the fiscal situation. Romania has come out of the excessive deficit situation, Cyprus hasn’t, Romania’s public debt is below 40 %, Cyprus’s is 80 % going on 100 %, and the Cypriot budget cannot support banks that are several times larger than the budget and that rely on external flows. We don’t have that,” Isarescu stated.

Source: Bucharest Herald (read more)

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