Senior BNR economist Lazea: Deficit, inflation, interest criteria for euro adoption, in peril

The budget deficit, inflation and long-term interest criteria for Romania's switching over to the single European currency, the euro, are in danger, Valentin Lazea, senior economist of the National Bank of Romania (BNR) and secretary of the committee in charge with Romania's switchover to the euro, said Monday. 

"The tax and wage relaxation policies started in the summer of 2015 and accentuated by governments of various political hues in the years 2016 and 2017, make it difficult for Romania to keep on meeting the nominal criteria. The greatest danger is overgrowing the aggregate budget deficit that should stay capped at 3 percent of the Gross Domestic Product (GDP) and which, according to European Commission's forecast, is likely to exceed this level shooting for 3.9 percent a year unless compensatory measures are taken," Lazea said at a conference called "Romania and accession to the Eurozone," organized by the European Institute of Romania (IER) and the Ministry of Foreign Affairs (MAE). 

According to Lazea, the aggregate budget deficit is not the only criterion in danger. 

"There are two other criteria that risk becoming unlikely to be met next year because of these pro-cyclical policies. They are the criterion for inflation, that harmonised consumer price index, and the long-term interest rate criterion. Inflation is a moving target that this September was standing 1.5 percentage points above 0.4 percent, which was the average of the three best performing states, in other words 1.9 percent. Romania was fulfilling the criterion in September. Let us say that this inflation criterion will be around 2 percent next year: Romania will exceed it in March 2018 according to the current inflation forecast. Even if the criterion luckily for us reached 2.5 percent, that level would probably be exceeded toward mid-2018, according to our forecasts," said Lazea.

AGERPRES.