Romania's National Bank (BNR) governor Mugur Isarescu maintained his rhetoric against currency depreciation as a means for correcting the external deficits in the morning of November 28, after the exchange rate went above RON 4.8 to EUR prompting speculations about imminent sharp exchange rate correction.

He admitted that “we are facing hard times”, but he assured that the problems are “manageable," local Hotnews.ro reported.

Isarescu pointed to the public deficit as the fundamental cause of the external deficit. “80% of the external deficit comes from the fiscal deficit and we should put an end to all these talks about the exchange rate,” he said.

Only after the budget deficit issue is settled, one can consider the issue of raising the pensions, Isarescu also said continuing the central bank’s rhetoric against the 40% pension hike next September, started in the day before by BNR chief economist Valentin Lazea.

As regards the approach to the fiscal policies, Isarescu showed support to the Government’s decision to pay all the arrears to companies at the cost of pushing up this year’s deficit to 4.4% of GDP.

He also said that the money market is filled with liquidity and suggested that the Government should not use its buffer excessively. He also said that tightening the monetary policy can't substitute a good fiscal policy. Finally, Isarescu called for calm and balanced decisions.

editor@romania-insider.com

(Photo source: Bnr.ro)