Romania Ctrl Bk: High Borrowing Costs Reflect Inconsistent Economic Policies

He said the credit fundamentals don't justify the high spread of Romanian credit default swaps, which trade at 300 basis points over performing economies in Europe.

"Romania's CDS reflect a reduced coherence, if not of the policies, then certainly of the message we send abroad (…). We are completely incoherent if we speak about cutting the value added tax level as a solution to exit the crisis, just three months after we've increased the rate," Isarescu told a seminar.

He said Romania was forced to increase the sales tax to 24% from 19% to lower the budget deficit, a measure that markedly affected the monetary policy.

The measure has broken "an entire cycle of monetary policy easing at the central bank and it's no joke to have a certain pattern brutally interrupted, and even to face the risk of having to go back," Isarescu said.

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