There are no monetary solutions to the fiscal problems, not without secondary effects. Romania’s problem is fiscal- budgetary


The Romanian Investor Relations Association (ARIR) organized the fifth edition of the monthly online debate “Market Sentiment”. The main conclusion after the discussion is that Romania’s problem is a fiscal-budgetary one and it cannot be solved through monetary measures without generating secondary effects.

Cristian Popa, CFA, Member of the Board, NBR
“A topic that I am constantly revisiting lately is, unfortunately, and is my duty to say: the deficit. Romania’s problem is a fiscal-budgetary one.
I state it very clearly: there are no monetary solutions to fiscal problems, not without secondary effects. When you do not have an international currency as backup (the dollar for example), printing money for financing the deficit, let’s call it “printer”, creates inflation quickly and leads to the depreciation of the national currency. High inflation is the most “cunning” tax, it burdens exactly those with low incomes. When it comes to the policies of the National Bank of Romania in the last period, the key words are balance – the correct dosage of measures, sustainability – quick decisions but with a long horizon, transparency – the Governor constantly explained to the public the measures adopted by the NBR, but also room to operate.
We have lowered the interest rates, we have stabilized the exchange rate, we have given liquidity and our forecasts were right, I think that we did our job well. We are analysing what can be done from now on. The NBR did boasted neither with its acquisitions program that performed very well, nor with the gradual reduction of interest rates and the maintenance of a stable exchange rate at the same time, which is not easy at all, nor with the prudential market support measures, which was not praised. The LEU is the most stable currency in Central and Eastern Europe, with the lowest depreciation in the region. Looking to the future, I think that the right word remains prudence, when it comes to the monetary policy and stability, when it comes to the exchange rate. Even in these difficult, complicated conditions, I do not think that the subject of relaxing monetary conditions is closed, but only with caution, a lot of caution, maybe not immediately and maybe very gradually, because the risks have also increased ”.

Daniela Șerban, ARIR President & Co-Founder
„Currently we do not have too many optimistic news from the market as we had two months ago. Considering the medical crisis backgound, we have many affected companies and we can say that the unemployment rate is increasing, so it is essential to use all the resources for the economy to recover, both being interconnected. The main goal of the capital markets is to finance the real economy and we have to take all the measures to grow the capital market.”


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