Croitoru, NBR: Consumer spending needs to be cut by 5bn euros to "sweeten" the loss of financing

A significant adjustment of the current account of 4% of GDP, done in an orderly fashion, is strictly necessary to "sweeten" the manner in which foreign investors will decide to cut foreign funding in Romania, believes Lucian Croitoru, NBR Governor's advisor.

The reduction of the foreign deficit by this percentage of the GDP could generate more credibility for the policies in Romania, as it would lead to a lesser decline of the foreign funding, to less pressure on the RON to depreciate and to an about 5% economic growth. Croitoru feels this would be "the strong scenario" that would give investors the impression that Romania's economic policies are consistent.
 
With the international financial crisis ongoing, the appetite of foreign investors and the resources they are willing to invest in Romania are dwindling, and the foreign vulnerability is high, because of the high level of current account deficit. Under the circumstances, it is necessary to strengthen the fiscal policy and adjust the foreign imbalance.

Ziarul Financiar