Tonny Lybek to Romanian authorities: We're ready to come and discuss the next instalment. We're coming when you are ready as well!

Romania was affected by the economic crisis because of some vulnerability that could have been observed since 2008, the IMF representative for Romania and Bulgaria Tony Lybek declared, addressing the current account deficit, public debt, but also other unbalances. The IMF rep explained that the strategy for coming out of the downturn needs to be based on four piers: the European Central Bank coordination initiative, several fiscal measures based on sustainability and predictability, a monetary policy insuring the stability of prices and a restrictive fiscal policy. „It is true that the inflation aims have been overtaken during the last years, but this is due to loose fiscal policies”, Lybek added.

Raiffeisen Bank chief economist Ionut Dumitru

Industry came out of the recession. The unemployment rate is lowest in comparison with the new member states. Others record 220%, while we record 7%.

I heard the question why did we need the IMF money. The problem must be viewed from a different angle. Without this money, the adjustment would have been much more abrupt. The money makes it easier to go through the crisis.

The leu is much more stable. The country risk perception improved.

If we look at the deficit and the economic growth, we notice that the budgetary policy accentuated some vulnerabilities, consumed ammunition when it wasn’t supposed to.

We risk a public debt explosion.

The international reserves have given us a good position, having the choice to use them to make the economic adjustment more tolerable.

Central Bank (BNR) chief economist

Foreign investors become increasingly sceptic in financing countries that live on debt.

We had an honourable investment rate, namely 20% of the GDP. An extremely big part of the GDP was made-up by consumption – 84.5%. The price that Romania paid for this huge consumption was the current account deficit. Without the expectation to have a positive net export, the adjustment needs to be made from consumption.

The consumption needs to drop 5%.

In the future, Romania’s growth needs to be based on investments and net export. For this to happen, all fiscal structural policies will need to stimulate economies and investments.

For example, I believe it would be wise not to allow the currency exchange to appreciate. It would stimulate exports.

Regarding the fiscal policy, the duties could be increased. The pensions system must come back to a system that corresponds with the contributions.

The tourism potential is huge. The state is to blame for not providing the infrastructure, but also the hotel owners, who want to recover their investments in two-three years. The tourism staff is the second worst paid in Romania. Overseas, it is the second best paid, after bankers.

Romania does not need to become Singapore from the East. It needs to export.
The political popularity of growth based on consumption is staggering. It is easy to promise someone that they will have two cars instead of one etc.

In the 80s, Romania recorded + 7% of the GDP. Of course, we don’t need to get here, but the collective mental was trained to think that export equals suffering.

Foreign investors come and ask us what do we do to stimulate consumption. Consumption is the foreigners’ mantra. This is what they wake up with, this is what the go to bed with. And this is appealing to politicians.

The inflation must be the main preoccupation, of course. I don’t adhere to the idea of a depreciation aiding export. But if strong appreciation pressures were applied, there would be the need to resist it, even if this would help with inflation.
BRD-GSG chief economist Florian Libocor

Next year will be a very difficult year. This is the only certainty.

When you enter a crisis, all you can do is to manage your fall.

I subscribe to the scenario according to which we reached the crisis’ minimum, but this does not mean that we’re through.

The European Commission estimates that the year will end on a positive figure. It does not matter the figure, but to transform it into something sustainable. Up until now, I believe it can be achieved.

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