Romania Ctrl Bk Reserves Can’t Be Used To Cover Deficit - Gov

Speaking in an economic seminar, Isarescu said recent talks on using the central bank's international reserves to avoid painful budget corrections couldn't possibly materialize.

"The state wouldn't be able to borrow the funds needed to cover these deficits. The social security deficit alone is of EUR3 billion, namely the country's entire gold reserve," he said.

In addition, European central banks are forbid to finance public deficits under the EU Treaty, Isarescu said.

"It's strange that the proposal to use the forex reserve for purposes other than the ones it was intended for came from the parliament," he added.

However, there is one "wise" way to utilize central bank's reserves to support the social security budget, namely to use the tax on the bank's profit to pay pensions, Isarescu said.

"Last year, we've transferred EUR300 million to the state budget, namely 80% of the bank's profit (…). This means we've paid 150,000 average pensions monthly," the central bank's head said.

He added Romania needs foreign currency and gold reserves to increase its sovereign credibility and borrow money at good yield on foreign markets.

Romania's June foreign exchange reserves stood at EUR31.627 billion, while the gold reserves were at EUR3.37 billion (103.7 metric tons).

Thus, the country's overall international reserve reached EUR34.9 billion in June, down from EUR35.25 billion a month earlier.

If you liked this story, please follow MEDIAFAX.RO on FACEBOOK »

The content of mediafax.ro is for your information only. Republishing or using this content is forbidden without express consent of MEDIAFAX. For this consent, please ask for it by mail at vanzari@mediafax.ro.