Romania eyes Euro Zone entry in 2019

Romania eyes Euro Zone entry in 2019

 

By Daniel Stroe – Bucharest

The Romanian Government has set 1 January 2019 as the country’s Euro Zone entry date, a minister announced during a financial conference held in Brussels.

Given the progress achieved in terms of real and nominal convergence, development of structural reforms and solid perspectives of economic growth, the Romanian Government set 1 January 2019 as target date for Romania’s entry into the Euro Zone, Budget minister Liviu Voinea informed during the ECOFIN meeting in Brussels.

The announcement received a positive welcome, the Romanian Ministry of Finance said in a press release.

Also in Brussels, attending a meeting of the Board of Governors of the European Investment Bank, Romania’s Central Bank’s governor Mugur Isarescu outlined that the 2019 target date is not out of reality, but it calls for a strong political consensus and a thorough evaluation of consequences, namely in terms of price alignment.

“We support any objective the political factor, in a consensual manner will establish, and we will have our say whether it is realistic or not. As concerns 2018-2019, I don’t believe it is outside a certain reality, but it is good, if we anchor ourselves into achieving this objective, to set some intermediary time limits because it won’t happen like that: on 1 January someone comes with a wand and there you go, you have entered the Euro Zone. People have to know what this is about” Isarescu said.

But he also pointed out that, apart from meeting financial targets, Romania also has to align its development level to the one of the other Euro Zone member states. “The real convergence is very complicated to measure; it’s not only the GDP per capita, but also the spread of development across the country. We cannot join Euro Zone only with Bucharest, but with the whole country and we need to evaluate the consequences. The very moment we joined the Euro Zone prices are aligned. A Bucharest can better go through an increase in the price of bread, because he doesn’t eat much of it, but 100 kilometers away from Bucharest they eat a lot of bread” Isarescu put it colloquially. Such objectives are supposed to mobilize and not discourage a country, the governor also concluded.

Last year, Romania announced it formally renounces joining the Euro Zone in 2015, as previously established. The announcement raised questions mainly about disadvantages such a step would generate among the population given the large economic gap between the country and the rest of the Euro Zone countries.