The Government has promised, half-heartedly, to reduce the budgetary deficit to less than 2.5% of GDP, to straighten out public spending and to avoid offering any "electoral giveaways", while the NBR "will remain aggressive" if necessary to curb inflation. This was the conclusion of yesterday's talks held by Prime Minister Calin Popescu-Tariceanu, NBR Governor Mugur Isarescu, and Finance Minister Varujan Vosganian.

"We are all responsible officials, aware of the special situation the country is going through," Isarescu said.

The three officials appeared before the press after an hour of talks, in a public image exercise that the head of government wanted to conduct as early as last month to show the markets that he coordinates his efforts with NBR's to maintain the macroeconomic balance.

The steps discussed were only outlined: the Government's intention to keep the budget deficit below 2.5% of GDP reestimated for 2007, the attempt to persuade local authorities to stop the spending "frenzy", avoiding the avalanche of spending made by ministries, limiting salary raises to 10-11% in the education and health care sectors, to 5% for the military and public peace sectors, and 4% for magistrates, the control over spending by ministries for equipment and the restructuring of CFR (national railway company). NBR's position under the circumstances? "If need be, we will remain aggressive, because we have a certain autonomy. We will take every step we deem necessary to reach our inflation target. NBR's reaction was the right one because we are having an outburst of inflation. We have a dramatic change of attitude towards Romania and a tendency to exaggerate on the part of markets," Isarescu said. NBR increased the monetary policy interest rate for RON by one percent again on Monday, which has now reached 9% from 7% in October.

The head of the central b