Isarescu: IMF agreement is an anti-crisis programme, why come with other bombs?

The agreement with the International Monetary Fund and the European Union is an anti-crisis programme and there's no need for other "bomb" programmes to complete it, said BNR Governor Mugur Isarescu.

"The agreement with the IMF and the European Union is an anti-crisis programme in itself, I do not know why to come with other bombs. It is very good for the press. I see a totally improper use of the concept of crisis. Each understands what he wants," said Isarescu. He mentioned that the issue of the present moment is to resume economic growth, much of the correction being already consumed.

In Isarescu's opinion, the moments of tension passed both for the forex market, which registered a high volatility, and for the monetary market, whose functioning was almost blocked for two months. Isarescu says that the dominant note of the agreement with the IMF is moderation and he pointed out that a forecast of minus 4% on economic growth, a projection also used by the National Bank of Romania, cannot be considered optimistic.

Interest on deposits should be below 9%

Interest on bank deposits should be situated under the monetary policy rate, namely below 9% per year, as the banks can cover their needs for short-term liquidity from the central bank, BNR Governor, Mugur Isarescu said on Wednesday.
"The interest on liabilities should be below our interest rest, below 9% per year, because the market has recovered, and the banks will find the necessary short term liquidity, coming from the BNR," Isarescu said, commenting on the assertion in the release of the BNR Board on the distortions of the interest rates in the market.

The central bank official believes that interest rates will fall in the forthcoming period and rejects the analysis appeared in the media that an entry into normal could be possible within 6-12 months.

"Interest rates of 12-13% are given, even on new deposits. Perhaps something in the internal kitchen of the banks does not work. (...) There is also a distortion against the inflation rate. At 6% inflation, the banks give 6 % real rate. This is a luxury, to be delicate," said the BNR governor. According to Isarescu, the high rates charged by banks are offset only by the negative information and analysis on Romania, which withhold a large flow of capital to the economy.

Curierul National