The BNR Governor, Mugur Isărescu, has advised the commercial banks to buy government bonds to allow them access to refinancing as well as to help finance the budget deficit.
The financing of the budget deficit at a reasonable cost is vital for Romania in the current situation, when it is difficult to cover even a low level of 2% of the GDP, said the NBR governor, Mugur Isărescu at a meeting with the Finance Minister, Gheorghe Pogea, and the banks. He stated that, due to the current circumstances, with limited lines of financing from foreign banks and the difficult access to external programs for state funding, financing the budget is a problem, even on the domestic market, through government bonds.
Isarescu explained to several bankers that waiting for the interest on government bonds to reach 17% is incoherent as compared to the reality. "Some presidents said they didn't have approval from the shareholders for exposure on the Romanian state. If this is true, I will address the staff, the shareholders, and the supervisory bodies in the state", said Isarescu. Despite these problems, the stock of government bonds rose in the last three months from 12 billion lei to 25 billion lei, the governor announced. "The resources are not the same, and the Romanian National Bank cannot help financing the deficit at all. The occurrence of additional sums in order to finance the excessive deficit is vital", said the governor.
AGREEMENT WITH THE IMF?
The variant of a stand-by agreement with the IMF costs hundreds of millions of euros, which includes a non-utilization commission of 25%, Isarescu said. "How can a central bank or government ask for a loan? For what? (...) To fill a financing hole in the private sector, which is not known precisely? (...) Costs of hundreds of millions of euros come with such an agreement and it will have fut
