RO central bank backs Govt.’s plans for moderate fiscal consolidation

Romania’s National Bank (BNR) decided to keep the monetary policy (refinancing) rate at 2.5%, in its board meeting on January 8, a decision aimed at achieving “sustainable economic growth”, among others.

The new Government’s gradual approach to the fiscal consolidation is “decent but not enough,” BNR governor Mugur Isarescu stated in the press conference after the board meeting.

He implied that the Government should abstain from hiking the pensions by 40% in September, as planned by the previous Government.

“Let’s be serious. There is only one solution, and this is a political one. When the economy grows by 4%, one can’t raise something by 40%,” the central bank governor stressed, Hotnews.ro reported.

Isarescu also said that BNR and the Government “have cooperated” [to settle the hidden fiscal deficit inherited from the past Socialist Government] and, as a result, the interest rates and the exchange rate have remained steady.

The BNR Board’s decisions aim to ensure and preserve price stability over the medium term in a manner conducive to achieving sustainable economic growth and amid safeguarding financial stability, the monetary authority said in the press release on the monetary policy decision.

(Photo: bnr.ro)