Basescu: Current account deficit will be 5-6 percent in late 2009

In the first three quarters of 2009 „the unsustainable tendencies that have appeared in the past few years were inverted” and „the corrections made were quite significant and were reflected in important adjustments of some macroeconomic indicators,” President Traian Basescu told the plenary meeting of Parliament on Tuesday.

„The reduction of the current account deficit is the deepest going correction. It is estimated that, in late 2009, the current account deficit will be 5-6 percent of GDP, a level that is regarded as sustainable by foreign financiers as against 12.3 percent of the GDP in 2008,” said Basescu.

He says that, as compared with 2008, the financing of the current account deficit relies on direct foreign investments. „It is estimated that 2009 will bring the complete covering of the current account deficit from direct investments as compared with about 50 percent in the previous year,” Basescu stressed.

The Head of State says that the inflation rate, after increasing in the first quarter, came back to the descending trend. „Moreover, in the past two months, the monthly inflation rates were slightly negative, from 6.7 percent in January to under 5 percent in August 2009, and there are real chances to make the inflation rate fit into the variation basis around the target that was established, 3.5 percent plus/minus 1,” added Basescu.

He also said that the currency reserve had grown this year by 1.5 billion euros and amounted to 27.5 billion euros in August, when the National Bank of Romania released an important part of the compulsory minimum reserves. In context Basescu admitted that the financing granted by the IMF and the EU also contributed to the current level of the reserves.

„The financial crisis and some adjustments we brought about led to recession. In the first six months of 2009 the pace of the economic growth went down, minus 7.6 [percent] as against the similar span of time in 2008,” added Basescu.

The President made it clear that in 2009 the economic growth would be minus 8 percent as against 2008. Basescu insisted on emphasizing the fact that the budget situation was still „very difficult and this is due to the pro-cyclical character of the fiscal policy in the previous years.”

The decrease in the country risk in the past few months marks the increase in the investors’ confidence, said the Head of State. „The investors’ most important indicator of the country risk went down from 780 in February to a little over 250 in September 2009,” said the President, who added that the confidence would go on growing as the implementation of the coherent governmental policy continued.

In context Traian Basescu appreciated that the main concern of the authorities iwa not so much to resume the economic growth soonest as to create the conditions for a high quality enduring recovery, first based on investments and second on consumption.

The Head of State said that the signs of the economic growth were visible in Romania too in the processing industry and in some services. „In the fourth quarter of this year we may find a substantial recovery of the GDP as against the fourth quarter of 2008, this not being, however, a positive growth. The positive growth will be resumed in 2010,” opines Traian Basescu.

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