Wage Hikes Sustainable, Ctrl Bk Opinions Out Of Context - PM

 

He said the government’s decision to increase pensions and wages is backed by sturdy economic growth in recent years. Tariceanu added such measures need to be correlated with the productivity index.

He also said the statements of the central bank’s governor were taken out of context, adding the government and the central bank collaborate well, and each institution has its own responsibilities.

Central bank governor Mugur Isarescu said Thursday Romania needs to prioritize and under no circumstances can it afford to loosen its fiscal policy.

“The central bank has only this to say: Stop pulling on the economy lest it breaks!” Isarescu said during a financial seminar.

Romania’s economy has been growing steadily over the past nine years and will continue this path only if the government has a clear list of priorities, the central banker added.

“We cannot hike wages, pensions and loosen fiscal policies at the same time. We need to prioritize,” Isarescu said.

The bank governor also said the central bank is not criticizing the government, but signals potential risks.

The Romanian government hiked pensions by nearly 30% starting Nov. 1 and plans to up pensions and public sector wages again next year, after several such increases in recent years.

Moreover, Romania is in for two election years and Isarescu urged for a “firm grip on the country’s helm for the sake of this government and those to come.”

The central banker also said Romania has to fund education, healthcare, infrastructure and closely watch private sector growth as well.

“We have to be careful because, pull too hard on the reins, and they might snap,” Isarescu added.

 

 

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