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Isarescu: Economic growth slowed down by capital withdrawal

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Fiscal adjustment measures taking place at the same time with the withdrawal of foreign capital by banks would slow down sustained economic growth, said BNR governor Mugur Isarescu. He added that exits of 9 billion euro in 5 years slowed down the GDP advance. “If fiscal adjustment is overridden by an uncontrolled deleveraging process, the withdrawal of foreign capital, economic growth would be hard to reach. Withdrawals of 9 billion euro have been made in 5 years, a third of which in 2013, said Isarescu at “The EU-South East Europe Summit”.

 

He showed that an end of the road was reached in terms of financing, local subsidies being financed mainly by the domestic market, being encouraged by authorities. The governor pointed out that in Romania, foreign exchange credits dropped under 60% and may reach 50%.

 

“We hope that transition from the dominant hard currency credit to a balance between foreign exchange credits and local exchange credits should be made in an orderly manner, without forcing an aggressive reduction of the credit-deposit ratio which would generate an excessive constriction at credit offer level and would affect Romania’s economic growth”, said the head of BNR.

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