Isarescu: 2005 was hardest for me

“This past year has been the hardest of my life as a governor, even harder than the ”90s, when the reserve was empty and harder than 1999, the foreign debt service peak.” The Governor of the National Bank Mugur Isarescu explained on Tuesday night at the Piata Financiara magazine Award Gala that Romania was now in the position of having too much money and an acute shortage of viable projects, which was giving NBR a considerable headache. This spring saw the lifting of restrictions on non-residents making deposits in RON with Romanian banks, which turned the monetary market into a target for speculative funds. The NBR answered by cutting interest rates. The NBR now has to push interest rates back up because of a rekindling of inflation (8.7% annual rate in October). Dwindling interest rates massively fuelled consumption, but industrial output is not increasing, thus leading to rising foreign deficits. ZF