Romanian Ctrl Bank Governor Says Arrears Worse Than Large Deficits

„Arrears are one of the explanations why we have both a recession and high inflation. This is a major problem for Romania because it’s like a contagious disease keeps spreading and hurts the foundation of a market economy, which is monetary and fiscal discipline, and timely payments. This causes a chain of payment delays worse than deficits,” Isarescu said at a seminar organized by the central bank, Alpha Bank and the Romanian Banking Association.

Isarescu on Friday said not paying one’s debts has become a „national sport” and called on the government to resolve the general arrears issue and give a positive example to all taxpayers.

„The arrears issue must be solved (…). The state must give a positive example on how to pay the debts on time,” Isarescu said Friday.

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Romania hasn’t met the end-September performance criteria in the sector of general government arrears and it will ask the International Monetary Fund for a new waiver of non-observance, IMF mission chief Jeffrey Franks said in October.

It would be the sixth waiver of non-observance in the arrears sector since Romania signed a EUR13 billion loan agreement with the IMF in 2009.