Romania Ctrl Bk: Correcting Structural Deficits Visibly More Difficult

Financing Romania’s structural deficits has become more difficult and the resulting imbalances may lead to social unrest, central bank governor Mugur Isarescu said Wednesday.

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Speaking at an economic debate, Isarescu said most sovereign budgets "are hurting" and Romania makes no exception.

"We see the same thing in Romania. We are no exception, despite some of the figures, such as the ones regarding the sovereign debt, being less than dramatic when we calculate the amount," Isarescu said.

"They are structural, long-term deficits which are hard to correct. A mere economic growth is not enough to correct structural deficits," he added.

The central bank's chief said financing these deficits has become a serious issue and the higher interest rates are one of the factors that hinder financing.

"All these can be the beginning of a vicious circle, which materializes into distrust and market reluctance to finance certain costs, eventually leading to no financing at all," Isarescu said.

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