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Central Bank Governor Mugur Isarescu resists ideas put forth by some politicians, that Romania's gold reserves may be used to cover the budget deficit.
"The Central Bank reserves will last to cover for only one year's deficit. And then, what? Besides, Article 123 in Romania's EU Accession treaty forbids central banks to finance with their reserves in any shape or form the budget deficits," Isarescu explained.
"Besides, an important gold reserve gives credibility and allows a country to access the credit market," he added.
Romania's current gold reserve stays at 103.7 tons, or about 3.3 billion Euro.
The country's public debt stays at 45 billion Euro, and the foreign debt at 87 billion Euro.
Isarescu stated his discontent with the public debate which included in its latest topic the idea to use the gold reserves to fund the budget deficit. He advised politicians to put on their payrolls judicial and financial advisers.
"If they are not experts in finance, at least they should be experts in arithmetic, to explain politicians that there is no way one can spend beyond one can borrow. Besides, one should also become aware that not all ideas are good to be aired, as by simply stating some of them, one could arrive at perverse consequences, Case in point: commercial banks are really pondering now whether they should finance the Ministry of Finance at 7% to 8% interest rates," Isarescu said.
But the idea it is not only an idea aired in the media.
National Liberal Party senator Ioan Ghise made public that he filed with the Senate a draft law asking for the country's gold reserve to be used to finance the budget deficit.
Translated by AAP
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