National Bank of Romania Sets Economic Goals for 2011

Advisor to the National Bank of Romania Adrian Vasilescu said the inflation rate must be kept below the 4% threshold, given that Romania has an 8% annual inflation rate, currently the highest at EU level and with 2% more than Greece.

This year, Romania must also seek to maintain stability on the currency exchange market, given that 2010 started and ended with an exchange rate of 4.3 lei for 1 euro. Should Romania fail to do so, it cannot further ensure the financial stability of the country. Vasilescu added that further economic growth for the next 2 or 3 years would result in an increase of the Romanians’ standard of living.



On the other hand, the 2011 budget was devised to meet an economic growth of 1.5% of the GDP and a deficit of almost 7 billion euros, tantamount to 4.4% of the GDP. According to Liviu Voinea, head of the Group for Applied Economics, the budget-planning process is flawed due to the focus set on economic growth. Such a scenario is very unlikely, Liviu Voinea argues, as we could see in 2009 and 2010. Voinea said the state should initiate the reform of the fiscal system in order to increase its public sector revenues.

“I’m particularly referring to a shift in focus from tax on labor, as is the case at present, to tax on assets, as happens in all developed countries. Taxes on property in Romania and their share in the GDP represents one fifth of the money developed countries manage to raise. The present-day structure of the fiscal system has seen its limits reached, especially following the 24% rise in the VAT. Romanians’ only hope to see their incomes swell is for the economy to be re-launched. In my view, we should at least aim to be on the same level with Bulgaria, Slovakia and the Baltic States, where tax on property accounts for 38% of the GDP as compared to 32% in Romania” said Liviu Voinea.

Economic expert Ilie Serbanescu equally warns that Romania will no longer be accepted in the Euro zone, and that the damaging policies of past years will further affect the economy in 2011.

“Will Romania overcome the downturn or not?” asks the daily paper Evenimentul Zilei, in an attempt to anticipate what 2011 has in store for Romanians. The daily further writes that 2011 looms ominously for employees in the public sector, but offers better prospects for those in the private sector. “2011, a harsh year when we will live on loans”, writes the daily paper Jurnalul National on page one.

The daily paper publishes economic experts’ estimates pointing out that Romania will register an insignificant economic growth that will have little weight on the population’s living standard.