Foreign financial resources will no longer be as abundant next year, with many lines of credit granted to banks falling due in 2009, whilst Romania will not escape an adjustment because nobody will be willing to finance a current account deficit of 14% in GDP, believes NBR governor Mugur Isarescu.
"I personally think we have no other option but to start from an accurate identification - though not easy to do, which should be as accurate and realistic as possible of foreign financial resources that will no longer be as plentiful as before and will force us to make an adjustment," the governor says.
As it will shrink, foreign financing will no longer boost economic growth. As a result, there will be slower economic growth next year, but Romania will not fall into recession, with GDP likely to increase by 3% and 6% next year, according to Isarescu.
The trend of economy will highly depend on how wise and balanced the elements of the policy mix are. "An efficient treatment starts from an accurate, true and visionary diagnosis".
In the governor's opinion, Romania is ready for an adjustment and "the adjustment has to be made as long as we have economic growth". "My personal option is for us to strive to show we are capable of what's called a soft landing. I believe this will be next year's battle".
A correction by as little as 1% in GDP is hard to achieve if it is not planned out and unveiled to the public opinion, believes the NBR governor. Isarescu adds he does not consider the possibility that the direct foreign investments carried out so far will not be finished, since this will be a major loss for investors, but does not bet on short-term, highly uncertain, speculative investments.
The governor maintains that "while we have all the tools to act, we know what economic policy tools we have and how to use them", we could be put at a disa
