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Isarescu: if we learnt from our mistakes, we will be able to resist the temptation to drop again in populist measures
The process of convergence of the Romanian economy to the standards in the EU must take place in a sustainable rhythm and the unfavourable experience in the period of the economic crisis should determine the decision-makers be able to resist the temptation to drop again in the populist measures, considers the governor of the BNR Mugur Isarescu.
‘Unfortunately, as professor Balcerowicz said (Leszek Balcerowicz – the maker of Poland’s transformation from a centralised economy into a market one- our note) bad policies are, as usual, easier to sell than the good ones’ stated Isarescu in a specialty conference.
According to him,the convergence process is not simple at all or linear, on the contrary it is one which hides many traps.
‘To ensure the sustainability of growth and as a consequence, the economic convergence is essential; even the global crisis, which affected so strongly the Romanian economy should learn that an excessive expension leads – sooner or later – a recession of proportion. The crisis surprised us in a complicated political framework, when out of electoral reasons, the fiscal deficit was left to reach very high levels, thus increasing the current account deficit already existent by a very rapid rhythm of economic growth supported by the massive inflows of capital. The economy evolves on troubling trends for the society when the decision-makers who are worried by the short term ignore the fact that fluctuations of the economic cycle must be slowed down by the macroeconomic policies, not by exaggerated ones’ the BNR governor said.
Moreover, Mugur Isarescu warned about the fact that the convergence made over night by jumping the stages is a dangerous illusion and the success of the convergence depends not so much on the speed but on keeping the correct direction and the stability of economic growth.
‘When real convergence is tributary to a short term visions, the price paid is the sacrifice of the macroeconomic balance, when the gaining obtained is short lived. The only way to deliver to the society a solid economic advance and the stability of the prices is the increase of the growth potential of the Romanian economy. Thus, the stability of the prices comes together with the economic growth while a too quick advance comes with major inflationist pressure’ the BNR head explains.
In his opinion, the potential of growth of the Romanian economy is affected by the slowing down of the public investments coming back and the structural reforms and that is why they should act with priority for the remedial of the issues which stop rapid progress from coming to life in these domains.
The governor of the central bank brought into discussion the role of the European funds whose absorption ‘ is far from satisfying’ but with whose help important public projects can take place and the domestic companies have the change to capitalise.
The BNR governor supported on Wendnesday at the National School for Political And Administrative Studies the lecture ‘ Romania’s development and the convergence issues’.