Isărescu: The programme for Romania’s switching to the euro starting January 1, 2015 needs to be reviewed

The programme for Romania’s adopting the euro starting January 1, 2015 needs to be re-discussed, as well as the set target, for the objective to be convincing, according to NBR governor Mugur Isărescu. The governor has repeatedly warned that adopting the euro before the economy adjusts and domestic firms become competitive on external markets can be a trap, a “black box”.

The NBR has restarted its determinedness to bring inflation back on a downward trend, with inflation as one of targeted indicators for euro adoption. After the central bank has managed to drive inflation to a single digit rate in recent years, now it is being forced to reengage in a battle with price increases after the Govt. decided to lift VAT by 5% to 24%. The bank decided to keep its 2010 target unchanged, at 3.5 plus/minus 1% despite downbeat indications. For 2011, the NBR revised its target from 2.8% to 3.1%, after it raised its estimate for this year from 3.7% to 7.8%. Inflation switching back to a downward trajectory and sustainable economic growth vitally depend on the firm implementation of fiscal consolidation moves. NBR officials expect a gradual, delayed economic recovery.