Romania More Exposed To International Markets Crisis, Frmr Min
The international economic crisis is likely to affect Romania more than its neighboring countries, said Mihai Tanasescu, adviser with the International Monetary Fund, or IMF, and former Finance minister.
The international economic crisis is likely to affect Romania more than its neighboring countries, said Mihai Tanasescu, adviser with the International Monetary Fund, or IMF, and former Finance minister. Tanasescu mentioned among Romania's soft spots the big foreign trade and current account deficits, poor fiscal revenues collection this year, compared with previous years – all of which make the country vulnerable to financial and economic shocks from abroad.
All these factors influenced the flow of foreign money both into the banking system and on the stock exchange market, leading to seizable changes in the exchange rate and in the stock market indexes, explained Tanasescu.
He said that a clear commitment of the political class to the program aiming for the convergence of Romania's currency to the euro zone would bring about more credibility and a positive influence on the stability of the national currency.
Tanasescu gave the example of the Czech Republic, Poland or Slovakia, which all succeeded in having low fluctuations in their currency rates, in spite of the troubled international waters.
Tanasescu said that concrete moves should be made in the near future to restore faith in the Romanian markets.
First, decision makers should swiftly define the long-term priorities according to the currency convergence plan; to cut down public spending and the fiscal public deficit.
At the same time, structural reforms should continue, so as to bring down the quasi-fiscal deficits fueled by public companies and consolidate these companies' budgets in the national budget, said Tanasescu.
This is the only way our country could give clear signs to foreign markets that it is once again a stable, attractive and predictable market, added Tanasescu.
He also predicted that Romania's economy would continue to grow this year too, but that the growth rhythm would slow down in 2009, as a result of the impact of the international economy. Tanasescu also expected for this year to bring about the needed corrections and reduction in foreign and current account deficits, allowing Romania's economy to land safely, with no major shocks, given that the predictions for 2010 are for the economic growth rate to pick up again.
•Translated by Anca Păduraru