“From time to time you have to look in the bulletin. This problem has clearly arisen. I’m not young anymore. I was there once, but many years have passed since then,” said BNR Governor Mugur Iserescu on Thursday, answering a question about whether he will run for a new mandate.

“It doesn’t even depend on me and there is no point in discussing this topic. Decisions are taken by the Parliament of Romania. We stay until the last moment, hold the reins, and then hand over to the next board, telling them what we have done and what remains to be done. We do not accept this decision (run-n.red). Parliament decides, political parties – as the law says. We must fulfill our duty here until the last moment,” Isarescu added

Responsible and serious conversations are being held between those who are proposed, but until the parliament calls, we will not comment, the governor admits

During the presentation of the Inflation Report, he uttered the term “fiscal adjustment” more than 20 times, expressing his belief that it is very necessary and hopes that it will happen gradually.

Foreign investors notice how difficult it is for us to make a fiscal adjustment, but the Government should make the adjustment.

“It is clear that society does not accept this, and it is not only an election year. This is the country we live in. There are so many discussions… Neither spending to be cut, nor taxes to be raised. So how then to reduce the deficit? Let’s just keep borrowing. But that doesn’t fit either!” – says Iserescu.

He also clarified that the real problem of Romania is not the debt, but the deficit. “The deficit must be financed. Having it unfunded is like having expenses you don’t meet. It must be financed – from internal or external sources. I don’t think we are a country that can play with deficit funding. Penalties appear when you have too much of a deficit, in the sense that interest rates increase. Foreign investors notice how difficult it is for us to make a fiscal correction, but the Government should make the correction,” Iserescu believes.

What else did the governor say at the conference:

• The expectations of business entities – due to the proposed fiscal measures that were taken from January 1 – show a slight deterioration in the sense of increasing inflationary expectations. Expectations of banking analysts are more calm. We are at the end of a three- to four-year cycle since the beginning of the crisis. And we made a comparison between Romania and three other countries that we can compare: the Czech Republic, Poland, Hungary. And note that during this period of 2021-2022-2023, Romania had the lowest inflation.

• In terms of economic growth, we really haven’t jumped off the horse. But it must be said that we avoided recession. We told you a year and a half ago that we are calibrating our monetary policy in such a way as to avoid the country entering a recession. Because we have a serious financial problem.

• We have a large deficit, and of the four countries, Romania has the most difficult financial situation, and the recession will make it more difficult

• There were some signs of easing in the labor market, which was a big problem in the past. In recent years, new hires have declined, labor shortages have narrowed, and we still have a very important year-over-year decline in labor costs

• We have a country risk premium. We are fined because of the deficit, and especially because of the budget deficit, which is the largest in the region. The largest among the four countries is not the public debt, but the deficit and the difficulty with which Romania manages to reduce this deficit. This is resistance both from the side of increasing incomes, therefore taxation, and from the side of reducing expenses.

• Of course, we also discussed the potential timing of interest rate cuts in monetary policy. But be careful, we have this trend of rising inflation since January. We need at least two months to confirm that inflation is definitely coming down

• We recognize that we have a serious fiscal problem as a country and this also results in an external surplus which is the largest in the region. So, apparently, the politically and socially acceptable approach is gradually. Yes, and we support this consolidation process. It will be difficult from what we see here at the National Bank. Therefore, perhaps, a realistic approach is to reduce, gradually ensure this fiscal consolidation