PSD's Dragnea: Central bank is inducing a state of mistrust in the gov't

The Speaker of the Chamber of Deputies Liviu Dragnea says in a letter made public on Friday, after the talks he had on Thursday with Prime Minister Viorica Dancila and the National Bank of Romania (BNR)'s Governor Mugur Isarescu, that the BNR is inducing a state of mistrust in the government, and in this respect, 'I find the monetary policy must be in harmony with the government policies.' 

'From this point of view, I express my concern to the measures taken at the beginning of the year by the central bank and which from where I stand, are not the most appropriate way to co-ordinate the macroeconomic policies. I believe that an adequate monetary policy should be configured based on the fiscal-budgetary policy and in general, on the governmental policies as set through the Ruling Programme without putting a question mark to the government's capacity to implementing the measures assumed or to accomplishing the budgetary laws' provisions. In my opinion, a monetary policy based on mistrust and the maximization of some potential risks is not, a policy favourable to a sustainable economic growth and could eventually lead to some results contrary to the expected ones,' Dragnea said in a letter to the BNR leadership.

He added that the reservations he has regarding the substantiation and the relevance of the measures taken in January and February 2018 are determined by the BNR releases, the monetary policy sitting minute of the BNR's Board on 7 February 2018. 

'The quoted document says that the BNR's Board have noticed the <>. In my opinion, in a public institution such remarks do not find their place at less than one month since the enforcement of the budgetary policy configured through the Budget Law No. 2/2018 and the Social Insurance Budget Law No. 3/2018,' said Liviu Dragnea.

The PSD leader added that although the Parliament has approved in December 2017 the state budget laws for 2018, where both the level of the public incomes and spending and the budgetary deficit level, are defined, shortly after the BNR's Board of Directors publicly expresses opinion that these laws are unrealistic and they will be broken.

According to Dragnea, despite the pessimistic prognoses Romania has shown a sustainable macroeconomic picture in 2017, while in 2018 the macroeconomic vision has in view a higher contribution of the investments in the economic growth and the strengthening of the policies of the purchasing power of the population, as forecast in the Ruling Programme. 

Liviu Dragnea also says in his letter to Mugur Isarescu that in 2017 price have recorded rises not only in Romania, but also in Estonia, Lithuania, Latvia, Hungary, Poland. 

'The inflation calculated by the BNR has a strong statistical feature that is comparing the fixed-base index of the constant prices in the current period with the one in the same period of the previous year,' added Dragnea.

Liviu Dragnea showed confident that the BNR knows that 'the main causes that have determined the inflation have nothing to do with the gov't's action' and that 'these are associated to the offer and not the excess of demand.' 

Liviu Dragnea drew attention that 'the successive increases of the key interest rate at the beginning of the year, when the private sector is forecasting its businesses and investments for the year 2018, are capable to seriously harm their confidence in the Romanian economic milieu.' 

Finally, he demanded the BNR a technical, very argued motivation regarding the repeated increase from the very start of the year of the key interest rate.