Isărescu, NBR: "Romania makes its foreign payments on its own"

The governor of the Central Bank, Mugur Isărescu, yesterday had a stern reply to the statement made by the head of the IMF, Dominique Strauss-Kahn, who said that Romania could default, along with countries such as Latvia or Hungary.

"Romania"s foreign payments aren"t made by the IMF or by its managing director. There is no danger of Romania defaulting on its foreign payments", Isărescu said yesterday, at the 15-year anniversary of the Bucharest Stock Exchange.

The NBR governor was annoyed at the reaction of the mass-media, that advertised the statement of the head of the IMF, even though it had no merit.

"I don"t take this piece of news too seriously. So credible it was that, the next morning, the RON started to appreciate and Romania"s CDS is better than Spain"s, to say nothing of that of Ireland", Isărescu said ironically.

On Wednesday, Dominique Strauss-Kahn said, in an interview for Swiss TV station TSR, that some countries have gone into debt trying to avoid the financial crisis, which has increased their risk of default.

The governor of the NBR has also said that he does not agree with the claim that Romania not being able to pay its 1 million employees in the public sector. Such a situation would not bring into question the ability of the state to honor these payments, but rather the laws that force it to make these payments: "I do not agree with the reasoning that the state has gone into default if it can"t pay its 1.3 million employees. This means that the idea of budget adjustments is completely disregarded. Someone gave inadequate laws which raised the wages, without any the financial means to do so. If a country restructures its administration, that does not mean it is going bankrupt. We have reached the stage where people using primitive thinking decry the 25% cut of wages in the public sector. I would ask those people how would they explain the fact that those wages were actually raised 75%?"

The NBR yesterday announced an exchange rate of 4.2996 lei/Euro, 0.83 bani below the exchange rate for Wednesday, of 4.3079 lei/Euro.

• Libocor, BRD: The exchange rate remains stable

Florian Libocor, chief-economist of BRD - Groupe Societe Generale expects the exchange rate to remain stable. He said that Romania is nowhere near default. "I do not know where the arguments for this conclusion come from, but I am surprised at the ease with which the statement was made. It is the second time in the last six months, and it"s the second time one of Romania"s associates does that. A little more caution would be advised". He said that the future of the Euro still holds challenges, but the currency will consolidate in time.

• Cristian Cochintu, Admiral Markets, expects a strong impulse that will set the future direction of the exchange rate

The euro/leu exchange rate is forcing a decisive break of the most important resistance, located at the 4.32 level, according to Cristian Cochintu, of "Admiral Markets". He said: "Even though there have been attempts to break through this level, they have failed, but this time, the likelihood of this threshold being broken is far greater. The volatility has been decreasing steadily precisely because the price is caught between the support of the upward trend and the historical resistance, but over the next few days we will see a strong impulse that will determine the future direction. The unpleasant version would see the exchange rate rise to 4.5, and in the pleasant version, the exchange rate will go to 4.10, which the 2-year support. Unfortunately, the former is far more likely to happen".

Mr. Cochintu says opinions on the issues of the European states are rather contradictory: "The leader of German bankers and one of the most influential voices of the European Central Bank, Axel Weber, said yesterday in Paris that the funding for the bailouts of the troubled countries will be increased, in order to restore confidence in the European currency. He stressed that the ECB and the governments will do whatever is necessary to preserve the Euro".

• -• Daniel Dăianu: I fail to see any valid reason to claim that Romania is at risk of imminent default

The former Minister of Finance, Daniel Dăianu, yesterday commented the statements of the head of the IMF, Dominique Strauss Kahn, concerning Romania"s risk of default, claiming that he doesn"t believe this could happen, because this would question the very validity of the programs of the IMF.

"I"ve read only the account of that statement, I haven"t had the opportunity to examine the statement itself, but the account (...) surprises me. There are countries that are supported by programs of the IMF and the EU - Latvia, Romania. If the statement is true, I find it rather odd, it would be the equivalent of questioning those programs themselves. (...) I do not want to comment on the list of countries mentioned in the statement, because it seems strange to list the countries that have received assistance to support their adjustment programs. Romania is not in such a situation", Dăianu said, quoted by Agerpres. In his opinion, the reason behind the statement by Dominique Strauss Kahn is the fact that he is worried the financial markets would become deadlocked again.

Daniel Dăianu also said that judging by the numbers, Romania is in a better situation than other countries in the European Union. "We have an adjustment program that is very painful, but which will probably bring the public deficit to a level far lower than the ones that can be expected in quite a lot of countries in the EU in 2011. All in all, I see no reason to consider that Romania is at imminent risk of default", Dăianu said.