Mugur Isarescu: Romania cannot correct its structural deficit by economic growth alone

Publish date: 22-07-2010
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Governor of the National Bank of Romania (BNR) Mugur Isarescu told a debate organized in Bucharest, on Wednesday, that Romania could not correct its structural deficit by an economic growth alone, but also that this country's sovereign debt was not dramatic at all.

"Budgets are in distress not only in Romania, but also everywhere Europe. In Romania, even if some figures have a dramatic character, Romania's sovereign debt is not dramatic at all. As for budget deficits, people worry not only about their size, but also about their structure. The budget deficit is difficult to correct and one of its corrections does not only arise from an economic growth. The mere economic growth does not correct a structural deficit," said Isarescu.

The BNR official added that financing structural deficits through a number of circumstantial measures may lead to Romania joining a vicious circle that will make investors not trust it any more.

"Financing these deficits through increases in interests, for example, can be a prelude to a vicious circle that makes markets not trust this country any more and even avoid financing. The financial overdraft is given by the size of the deficit. Money does not fall from heaven. Real money comes from resources," said Mugur Isarescu.


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