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Isarescu: Higher living standards this year will be felt in production and export industries only

Living standards will increase differently and the advance will be noticed as early as this year in the production and export sectors but it will be felt with delay in the budgetary area, Romania's National Central Bank governor Mugur Isarescu declared in an interview for Romanian news agency Mediafax.

He showed that social assistance beneficiaries will reach their living standards they enjoyed in 2008 in 2015.

My opinion is that, considering the way Romania's economy will grow, the recovery will be based on production and exports and less on consumption which will also dictate the way living standards will improve and the perception of the population, Isarescu sai. Isarescu said that Romania's biggest problem is the imbalance between the number of those contributing to the economy and pensioners and those who benefit from social assistance.

He said that this imbalance can be corrected in several years and that Romania needs to learn to get used to it. The other biggest problem, for Isarescu, is the inefficiency of public transportation infrastructure, the inefficiency of health, energy and education infrastructure. Romania's economic infrastructure is damaged. Romania's economy increased by 7.3% in 2008 while in 2009 registered a contraction by 7.1% and in 2010 GDP dropped by 1.3%.

Central Bank To Discourage FX Household Lending

The Romanian central bank is preparing a set of measures to discourage foreign currency borrowing among people who get their paychecks in lei, central bank governor Mugur Isarescu said in an interview. 'Foreign money lending should firstly target exporters and those making foreign investments,' Isarescu said.

He said exporters and local firms that make foreign investments are sheltered against currency exchange risks, unlike the bulk of the population.'There's the issue of unsheltered debtors, of people who earn Romanian lei (...). For this category, we are drafting special measures to discourage lending in foreign currency,' Isarescu said. He added that the measures will most likely be prudential, in line with the European guidelines in the field.

Foreign money loans are often cheaper than domestic currency loans, which reflect inflation and official interest rates. However, when the national currency depreciates, individuals can have trouble making their payments.At its latest monetary policy meeting March 31, the central bank left its main interest rate at a record low of 6.25% a year for a seventh straight time, while lowering the minimum reserve requirements for foreign currency liabilities to 20% from 25%.

Additionally, the central bank expressed the need for a 'continuous assessment of trends in non-government lending' in order to secure 'adequate developments in leu-denominated loans versus foreign currency-denominated loans.'Romanian private lending stood at 206.6 billion lei (EUR1=RON4.1035) end February, over 60% of which was in foreign currency.

Sursa: http://www.actmedia.eu

Tags: isarescu foreign currency central production living standards romanias

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