Loading ...In case the growth of the gross domestic product is not based on a depletion of resources, then this is a sound growth, but if it takes place by their depletion, then the difference goes to foreign imbalance, inflation or to both of them, governor of the National Bank of Romania (BNR) Mugur Isarescu said on June 27. He said Romania, at present, has an overheated economy.
"The current account deficit is 14%. Foreign investments cover just half of the deficit, while the remainder is a consumption growth, which is not sustainable. The Romanian economy is running at full throttle, but we should not let it pant", Isarescu said.
The BNR head stressed there are in the economy automatic cooling systems to stabilise it, with the taxation factor being one of them and a "natural" one at that.
The BNR head stressed there are in the economy automatic cooling systems to stabilise it, with the taxation factor being one of them and a "natural" one at that.
Isarescu cautioned that the economic growth obtained by increasing the interest rate on liabilities will draw more saving and curb consumption by discouraging borrowing. Borrowing may be discouraged also by making it more expensive, he added.
"All such statements that "the BNR makes lending more expensive" are superfluous. We are not a charity institution nor is lending merciful. It goes faster where there is richness. It doesn’t exact social balance", he pointed out.
Isarescu said there is an excess of applications for loans and if such excess might by covered by the increased production, that would be a very good thing, but he added that hard work is needed for production to grow.
The central bank governor made the remarks at debates called The Mugur Isarescu and His Guests Business Coffee Shop on Friday.
The event is part of the FINFAIR Money Fair being held in Bucharest on June 26-28 at which banks, leasing firms, insurance and credit firms, non-banking financial institutions and credit brokers present their offer.
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