OPINION
FINANCE MINISTRY THANKS THE CENTRAL BANK The Finance Ministry thanked the central bank for its policy to devalue the RON, the national currency. “The central bank, as an independent institution, sets its own policies, but a weaker RON will definitely have a positive impact on our country’s exports,” stated the Finance Ministry official. BY RADU CR|CIUN
http://www.business-arena.ro
What impression would this statement leave on you? It would be equal to a shock wave through the economy, a paradigm shift which would propel Romania into a “film” completely different from the one it has been playing in
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these past decades when exchange rate stability has been fiercely guarded. It might be like something from a sci-fi film for us, but in Poland’s case, it is as real as it gets. The thanks were extended by the deputy Finance Minister to the Polish central bank. Citibank estimates that in December the Polish Central Bank bought foreign currency on
the local market worth around $7 billion in an attempt to weaken the zloty and increase the competitiveness of Polish exports. Can Poland be suspected of competitive devaluation and if so, the question this raises for us is: What are we waiting for? Do nothing as our exports lose their competitiveness? Well, we are waiting for budgetary and macroeconomic policies as reasonable and predictable as Poland’s. (Alas, we wanted to copy the Polish model only when the dismantling of the private pension system was concerned, a measure that Polish politicians are regretting and are trying to fix.) As a picture is worth a thousand words, please see the graph obtained RADU CR|CIUN from our colleagues in the BCR’s Research Department. It shows where Romania stood in terms of budget deficit (vertical axis) and current account deficit (horizontal axis) in relation to other EU countries at the end of 2019 before the pandemic-induced crisis. Romania was an ‘outlier’, exhibiting completely different circumstances from the rest and mainly from its fellow Central and Eastern
