Romania Drops Plans To Join Euro In 2015
By Marian Chiriac
Prime Minister Ponta says deadline is not ‘cast in stone’, after bank governor dismisses adopting the single currency in 2015 as ‘out of the question’.
As economic conditions in the EU deteriorate and uncertainty grows over the prospects of the bloc, top officials in Romania say the country is not ready to join the troubled single currency in 2015, as planned.
“This deadline is not cast in stone. Anyway, Bucharest will continue to make every effort to meet the conditions for adopting the euro. What is important is to keep inflation and the public deficit under control, among other things,” the Prime Minister, Victor Ponta, said on Monday.
To join the eurozone, a country must meet five criteria, including price stability, a reasonably balanced budget and a stable exchange and interest rate.
Ponta’s remarks came after the central bank governor, Mugur Isarescu, on Sunday said that the goal of adopting the euro in 2015 was “out of the question.”
Isarescu also said that in Romania “EU accession was seen as a panacea. The dreams were too high.” He added that meeting the economic criteria for eurozone membership was a useful exercise, however, and keeping the budget deficit below 3 per cent of GDP was good discipline.
A new timetable for adoption of the euro will be discussed by the government following the December general elections, but this will make joining the Exchange Rate Mechanism, ERM, in January 2013 much unlikely. Accession to the eurozone requires a minimum of two years’ membership of the ERM before adopting the euro.
Neighbouring Bulgaria decided earlier to postpone plans to adopt the euro. In September, Sofia said it no longer saw the benefits of joining the troubled single currency, even though the country now satisfied all the criteria.
The last report on Romania by the European Commission, issued last year, said Romania has yet to comply with some of the criteria needed to join the eurozone.
Furthermore, inflation in Romania last year was well above the 1-per-cent benchmark and is likely to remain well above that level in the months ahead.
Romania has been given until the end of this year to reduce its deficit to 3 per cent of the GDP. The budget deficit was 8.3 per cent of GDP in 2009.
In 2009, Romania turned to the IMF and the European Union for a two-year 20-billion-euro emergency loan. Today it is still pushing through tough austerity measures to meet IMF demands.
