September 26, 2018

Mugur Isarescu – Romnian Fiscal regime doesn’t support economic recovery

BNR governor Mugur Isarescu said during a meeting held at ASE, that the fiscal policy does not support the economic recovery, nor can the monetary policy have a higher contribution to the recovery of the economy, because of the persistence of inflationist pressure coming from shocks on offer, despite the fact that Romania is still in recession. “We are still in recession or we are leaving it, but we still have inflationist anticipations. We do not believe that, if we had a laxer economic policy, things would be different. The reduction of the budget deficit from 9 % of the GDP to 3 % of the GDP represented a big effort; there are 6 % of the GDP. The monetary incentive was unable to compensate the fiscal policy. I suspect that the fiscal policy is still pro-cyclic,” Isarescu mentioned. The governor also reminded that the liberalization of the capital account was an obligation for joining the European Union in 2007, and the accession caught Romania unprepared, “with a relatively high inflation and a population without an adequate financial education.”

Source: Nine o’clock (read more)

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