The NBR insists on requesting support in its battle with inflation, especially from the Economy and Finance Ministry, as it increases its focus on bringing the current account deficit under control.

"Romania's economic situation remains positive and manageable, although improvements in the economic policies mix are required," warned NBR Governor Mugur Isarescu, during the "Mediafax Talks about Corporate Loans" seminar.

Over the last two years, the monetary policy, through the exchange rate lever, has born the brunt of disinflation.

"We have to know exactly what a central bank can do," the governor pointed out. Exaggerated use of the exchange rate and the interest rate to push prices down can be counterproductive in terms of foreign deficit. Isarescu sees a solution to manage the current situation in avoiding a relaxation of the fiscal policy along with certain adjustments for monetary conditions, although he did not specify what those were. Although the NBR identified a rapid increase in revenue as the main source of inflationary pressures, Isarescu is reluctant to rely on adjustments in this field or on strengthening the fiscal policy, because next year is an electoral year.

"Under no circumstances should the fiscal policy be relaxed at the end of this year or in 2008. I have the approval of the Prime Minister and of the Finance Minister on this," Isarescu added. He explained that such a solution was less than optimal, and the ideal scenario would entail a correlation of the increase in salaries with productivity gains, overlapped with the strengthening of the fiscal policy.

Over the past two years, the strong appreciation of the RON, which tempered the increase in prices, has fuelled the demand for imported goods, while Romanian exports have become more and more expensive on foreign markets. Under the circumstances, the current account