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Romanian Future Govt Should Avoid Econ Growth Acceleration–Ctrl Bker

Romanian economy is expected to register a significant advance until entering euro zone, so future governments should avoid pressing the gas pedal for the country’s economic growth, Romanian central bank Governor Mugur Isarescu said in a press statement Wednesday.
Romanian Future Govt Should Avoid Econ Growth Acceleration–Ctrl Bker
17 sept. 2008, 13:28, English

"Romania has got all the economic growth ingredients for a few years from now on. The biggest mistake of future governments would be pressing the gas pedal regarding the economic growth. (…) This would be an extraordinary enticement for any government," Isarescu said.

Romania’s economy grew 8.8% in the first half of the year, boosted by a robust 9.3% increase in gross domestic product in the second quarter, following a good agricultural year, according to analysts.

The Romanian Government said this year’s economic growth is expected to stand at 8.5% – 9%, compared with the gross domestic product growth of 6% the year before.

The governor said recently the country’s economic growth potential stands at 6% for the coming years.

Wednesday, Isarescu said the future governments should continue investments, but public expenses should be restructured, especially in the infrastructure sector.

Isarescu said foreign direct investments in Romania, which are expected to exceed EUR10 billion this year, EU funds and a saving rate of some 10% might trigger a consistent growth.

Romania would also need appropriate economic policies, given that the monetary policy measures could no longer be efficient, after their strengthening lately.

Isarescu said Romania needs a stricter revenue policy and fiscal policy strengthening, including the public expenditure structure.

The monetary policy measures adopted lately are in line with the role of a central bank, which should carry out what government finds harder to apply in an electoral year, according to Isarescu.

Since October last year, the central bank has raised the key monetary policy rate in seven consecutive steps by 325 basis points to 10.25%, from 7%.

Isarescu said the expansion of the privatization process period resulted in the Romanian state focusing more on dividing the public sector than on strengthening its institutions and playing its essential roles, such as the development of infrastructure and human resources, education and health sectors.