After the agreement with the International Monetary Fund (IMF), Romania will stay on the positive side of the economic evolution in 2009

After the agreement with the International Monetary Fund (IMF), Romania will stay on the positive side of the economic evolution in 2009, said on Thursday at a press conference Governor of the National Bank of Romania Mugur Isarescu.

'Thanks to this agreement, Romania will stay on the safe side in terms of economic evolution this year. The loan agreement will give us more time to do what we need to do, that is to attract structural funds and go ahead with the reforms,' the NBR governor said, adding that Romania, in the last three years, has fed only on foreign investment.

'If Romania had managed to draw the pre-accession and structural funds, it would have only needed another 9 billion euro, and for that amount a loan would have been unnecessary,' Isarescu said.

The NBR governor said that Romania aims to bring the public deficit in real terms at 3 percent of the gross domestic product, considering part of the unemployment will not be removed.

'With the loan agreement with the IMF, with economic growth, the outflow of funds from the central bank's reserve and the replacement of money with the IMF funds I suppose money will go to the private sector, so that the adjustment of the sector should not be so big,' said Isarescu.

As regards the rise in the unemployment rate, the BNR governor said that the faster structural programmes are activated the lower the unemployment rate will be.

Referring to the impact of the situation in the banking sector at international level on the Romanian system, the Governor of the National Bank of Romania said that the banks' branches in Romania are independent banks.

According to Mugur Isarescu, at present Romania does not need bank rescue plan. Mugur Isarescu said that the target of NBR in 2009 is to maintain the minimal compulsory reserves of the commercial banks, however, they have to be reduced because we cannot enter the euro area with reserves of 20% and 40%.

' NBR's target in 2009 is to gradually shrink the minimal compulsory reserves until 2012-2013.We cannot enter the euro area with reserves of 20% and 40%,' said Isarescu.

The rise in the minimal compulsory reserves was a measure taken with a view to discouraging the loans in foreign currency, said the NBR Governor.

'When we increased the minimal compulsory reserve, we did it to discourage the loans in foreign currency, which was so strictly categorized as disadvantage to Romania' said Isarescu, stressing that the loan in foreign currency was one of the arguments for which two international ratings agencies downgraded Romania's rating.

Source: Embassy of Romania - London