Romania's central bank drafted a plan to meet the country's target of adopting the euro as early as 2012, central bank Governor Mugur Isarescu said.
The National Bank of Romania in the proposals handed over to the government outlined priorities such as balancing public spending with falling inflation rates, interest rates, stronger capital markets and a stable currency, Isarescu said. „We proposed the government a plan with a consolidation period stretching over the next three to four years during which most structural reforms should be completed,” Isarescu said last night at a banking seminar in Bucharest. He didn't give the details of the plan.
Romania, which will become the European Union's second largest eastern member on January 1, is keeping to its plans to start its two-year period test of currency stability, known as the exchange-rate mechanism, anytime between 2010 and 2012 and adopt the euro no later than 2014, Isarescu said. „It may well happen that these catalysts consisting of joining the EU now and adopting the euro afterwards may weaken if we postpone entry” in the exchange-rate mechanism „excessively,” Isarescu said.
Romania, like Slovakia, which joined the EU in 2004, is holding to its euro-adoption timetable, even as others in the region, including the Czech Republic, Poland and Hungary, are delaying the switchover to the common European currency because either inflation is too fast or spending is out of control. Romania's inflation, at a 17-year low of 4.8% in October, is now lower than Hungary's 6.3%. „Same as the way Slovakia jumped in front of the Czech Republic, I don't rule out that Romania may adopt the euro before Hungary or other new members of the EU,” Isarescu said. „The most important thing though is not repeating their mistakes.” Isarescu
aid that although it reached record low levels in the past five months, „inflation isn't yet a solved problem in Romania.” The central bank will keep to its policy of directly targeting the inflation rate until the country enters the exchange-rate mechanism to make sure disinflation continues, he said. (Bloomberg)