Mugur Isarescu: It is normal for banks to have a procyclic behavior not for the government

There is a demand deficit, namely the economy will function below its potential in the upcoming period. Debt to the private economic agents can be considered a bad tax over the economic environment, Isarescu said.

Here are his main declarations:

• the impact of VAT increase over prices is permanent, but its impact on inflation is temporary
• the increase of VAT would generate an increase of consumtion prices by 4.2%
• for 9% of the products included in the consumption, the VAT remains the same
• the possible effects will be somewhere between 2.9%
• the Finance minister needs to take up every loan opportunity. The ministry needs a strategy for the loans from the foreign market, announce it publicly and discuss it with foreign investors
• currently, Romania's public debt and foreign debt are high and the strategy is essential
• the Central Bank is ready to supply the market with liquidity, but not too much so it will pressure the banks because banks would be in a position to cover the excess through deposits

Articole similare