BNR Governor: Corrections unavoidable, both of economy and wages

Sole solution is to make budget payments within reasonable limits, to make corrections in a transparent manner and to create jobs, stated on Tuesday Romania's National Bank Governor Mugur Isarescu in a seminar on monetary policy.

'If we refer to corrections, economy should be corrected, wages the same. This is unavoidable. The question is what can do the financiers, otherwise than postpone? Correction is made in a transparent way, by curbing spending, tax increases, or non-transparently in a dangerous, unjust manner, through inflation', said Isarescu. He added that the sole solution to be able to make budget payments is the creation of jobs.

'The sole solution to be able to make budget payments within a reasonable limit is to make corrections in a transparent manner, with required measures and to create jobs. Jobs alone pay taxes and contributions. If we tax the public sector employees and pensioners we do nothing, but redistribute these revenues. We are aware of that, but we pretend we do not know. The source is this, work places', added Isarescu.

In absence of adjustment measures, budget can widen to 10 pct of GDP

Romania's National Bank (BNR) Governor Mugur Isarescu warned on Tuesday that the country's budget deficit can widen even to 10 percent of the GDP in 2010, in the absence of adequate adjustments.

'Romania's budget deficit can widen to 9-10 percent of the GDP in 2010, level to be hit in the absence of correction measures', said BNR Governor.He warned that the collected amounts cannot cover the level of current expenditure and without adjustments, the deficit will widen. 'Concretely, in a month the expenditure is covered just 20 days and for the remaining 10 the Government must borrow money', explained the Governor why we face the danger of such a large deficit.

Isarescu compared the actions which must be implemented for cutting the deficit with a medical intervention: When a bleeding occurs, you must stop it first in order to have success.

'We see the budget as a huge pot from where the economy draws money, but the basic issue when we discuss the budget deficit is if there is, or not, enough money. We must act exactly to stop the bleeding, represented by the unharnessed spending', warned the Governor.

Budget deficit is financed from foreign sources

Budget deficit financing is made from sources abroad, stated on Tuesday Romania's National Bank (BNR) Governor Mugur Isarescu in a seminar on monetary policy.'In Romania, those who bring that third, with which the deficit is financed, should not be listened to? Money does not come from the country. Even though we have cut the foreign deficit, this is widening. We hope it will not hit 13 percent. If the economy starts growing, we will have more than 4.5 percent foreign deficit. The budget deficit financing is made from abroad', said Isarescu, quoted by Agerpres.