Georgescu (BNR): Currently there are no risks of severe nature to financial stability in Romania

At the present moment there are no severe risks to financial stability in Romania, but the general risk level is rising, similarly to developments around the world, said, on Thursday, the first deputy governor of the National Bank of Romania (BNR), Florin Georgescu, at the press conference launching the Financial Stability Report. 

"The main conclusion that can be taken from this second edition of 2019 of the Report is that, at the moment, there are no risks of a severe nature to financial stability in Romania. Nonetheless, the general risk level is on the rise, similarly to developments around the world," said Georgescu. 

He stated that the risk regarding internal macroeconomic tension is determined by the continuation of deterioration of twin deficits, namely the budget deficit and current account deficit. 

"The budget deficit is estimated, for the end of 2019, to significantly exceed the 3 pct level established both by the Law regarding fiscal-budgetary responsibility, as well as by the Stability and Growth Pact of the European Union. The negative balance of the current account is forecast to reach 5.1 pct of the GDP. On the regional level, Romania thus records the highest values for the two deficits. In this context, it's important to reiterate the fact that, at the national level, there is need for a balanced mix of macroeconomic policies, through corrections in regards to fiscal-budgetary policy, corroborated with the implementation of structural reforms to stimulate the growth potential on the long-term. Given the concrete data of the matter, we believe a gradual correction, but which would be put into practice starting with 2020, would bring on the long-term better results than a sudden adjustment of the macroeconomic imbalances with the declared purpose of reducing the budget deficit in the shortest time," the BNR official explained. 

According to the first deputy governor of the BNR, the measures comprised in the National plan to adopt the euro currency represent ways of actions, regardless if the objective of the stakeholders is the consolidation of Romanian economy, the reduction of gaps compared to developed economies or a quicker accession to the eurozone. 

"Many times, the policies and measures that were applied, over time, led us away, unfortunately, from the mentioned objectives. As I have said before, my conviction is that the macroeconomic situation is manageable in Romania. It's important to know how to use the resources wisely so that we modify the current economic model based on consumption, induced by pro-cyclical policies and reset the economic growth on new bases. These should stimulate investment and allow the speeding up of performing sectors with a high contribution in innovation and added value," Florin Georgescu emphasized. 

BNR is organizing, on Tuesday, the press conference regarding the launch of the 18th edition of the Financial Stability Report.