Romania’s worrying widening current account deficit, the country’s main vulnerability, can be controlled only through calculated fiscal and wage policies, which would be the best "medicine" for it, central bank governor, Mugur Isarescu said at a seminar organized by The Economist.
- Publicitate -
Romania, a one-year member of the European Union, is struggling to keep a swift pace of foreign investments in the country, after the year debuted with sharp gaps and drops in economy, dominated by a 9.7 percent hike in food prices, the effect of last summer’s drought which destroyed a third of the harvest in 2007.
Monitoring the country’s currency – the leu, which saw significant drop since the beginning of the year, can help master the C/A deficit, yet, this is not the best solution, he explained. Most tariffs for services in Romania, including rents and telephone bills, are calculated in euros and paid in lei.
Isarescu pointed the central lender should focus on keep inflation down to its yearly target, after he recently raised his end-year inflation prediction on February 7 to 5.9 percent from an earlier estimate of 4.3 percent.
Isarescu’s forecast is above this year’s end inflation target of 3.8 percent, plus or minus a percentage point. The central bank also missed the end-year 2007 target of 4 percent, plus or minus one point, as inflation rose an annual 6.6 percent in December.
There’s no time for fiscal relaxation now, the governor warned.
NewsIn
