Romania will witness a time of resetting

Iasi, May 14 /Agerpres/ - Romania will witness a time of resetting, Governor of the National Bank of Romania (BNR) Mugur Isarescu told a news conference on Thursday in Iasi, advising the country to 'make haste slowly,' because 'it takes some time for things to settle down.'

'I believe a time of positive appreciations will follow in Romania that will provide substance to economic growth,' said Isarescu.

Isarescu also said that what follows will not look like what used to be before the crisis to both the bankers and the private entrepreneurs.

'I think they will have to switch to genuine values, work, productivity, real projects and less speculative projects. I think a time of positive developments will ensue in Romania that will provide substance to economic growth. There will no longer be high profit moves, and they will have to get used to smaller, more reasonable gains,' said Isarescu.

The BNR governor also believes that things are also resetting at banks and the banks are rethought and they will categorically resume lending.

Speaking about bankers, Isarescu argued that they will have to reduce their interest rates on liabilities, which will not be an easy thing.

'I think it is very important that each bank under the current market conditions draw up a viable strategy for reducing their interest rates on liabilities. It is not easy to get out of the 16-17 percent bracket on deposits in an attempt to draw in customers. A real race of interest rates has started that is ran both ways and there is no easy way out. Interest rates now can only go down,' said Isarescu.

The BNR governor mentioned that because Romania has signed a loan arrangement with the International Monetary Fund (IMF) and reached an agreement in Vienna with commercial banks, the country will now have to compute its financing and borrowing needs on a sustainable curve. This computation should be performed so as to make sure the loan disbursements comply with the arrangement with the IMF, with the European Union and with the Vienna agreement.

'In other words, we are freeing resources that are theirs but that are also paid for. Now, we do pay them handsome interest rates. There is hard to find similar rates. That is why some bankers had a change of heart and no longer request cuts in forex reserves, because if they were to use the respective money on the international market, they would not get what we are offering them, that is almost 3 percent. We are generous now, and that is why we will also be generous when reducing the statutory reserves,' said Isarescu.

Isarescu also said that bank resources will be freed that have so far been with the BNR, and that the local currency, the leu (RON), has reached a sustainable level.

'It will be the market that will tell us where the exchange rates go. I believe they are now in sustainable territory,' said Isarescu in response to the question where the RON gets toward the end of the year.

[Source: Romanian National News Agency AGERPRES ]