Valentin Lazea (BNR): Romania could have entered this crisis head up

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Chief economist of Romania’s National Bank (BNR) Valentin Lazea stated on Friday, within the conference „Programme and anti-crisis measures following agreements with International Monetary Fund and European Commission.
What we expect from the Government, the National Bank and the banks?”, organized in Targu Mures (center), that Romania, the same as the Czech Republic, could have entered this crisis head up, if there were not three major problems.
„Romania could have entered this crisis head up, the same as the Czech Republic, if there were not three major problems: a very high budget deficit, 5.3 percent, the highest in the last decade, a current account deficit of 12.3 percent of the GDP and a very high crediting pace, of more than 60 percent.
Two of them are on the verge of correction: the current account declined and it is expected to fall at a fast pace and bank lending is also declining, maybe at a faster pace than it would be the case, or according to our expectations.
The budget deficit continues to be a problem and, therefore, all solutions to be found – because the administrations want money – must not aggravate this last problem, the budget deficit one, a problem Romania is still confronted with”, underlined Valentin Lazea.
He stressed that already Romania has the highest inflation rate among the 27 European Union member countries, of 6.47 percent and this fact can lead to a less accentuated economic growth and to inflation increase.
„Inflation is not very high, but by relaxing now the monetary policy too much, in the hope this will generate an even higher economic growth, we risk not to achieve that economic growth we hoped for and to reach an inflation rate of more than 10 percent.
And above 10 percent this might be a problem. GDP decline due to this inflation of more than 10 percent would lead to stagflation, much more dangerous in our case”, emphasized BNR Chief economist.
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