Romania Maintains 2014 Euro Adoption Target

• Valentin Lazea: Postponing the euro adoption would reflect poorly on Romania"s rating

Future candidates to the EuroZone could face more thorough supervision than their forerunners, according to Valentin Lazea, Chief Economist of the National Bank of Romania (BNR), who addressed a seminar on the planned adoption of the euro. He added that Romania was still targeting the ERM2 (Exchange Rate Mechanism) on 1 January 2012 and then keep the transition period to the minimum possible of 2 years.

In his opinion, a decision to postpone the target would reflect poorly on Romania"s country rating. "The adoption of the euro is not a technical exercise, but a political one, because the measures needed to ensure the sustainability of nominal convergence are not related to the monetary or fiscal policy, but to structural reform," Lazea added.

In turn, economists working for Romanian commercial banks concurred that Romania had a chance to adopt the euro in 2014, provided that the budget deficit was corrected. The volatile exchange rate is another problem that requires urgent attention.

"If productivity grows at a slower pace than salaries, we will obviously not solve the exchange rate volatility problem. Ongoing discussions concern various measures to limit the exchange rate volatility, but we are not going to be innovative about it. We will do what the European Union does," Lazea added.

According to him, in order to ensure real convergence, the structure of the Romanian economy needs to become similar to that of the EuroZone economies. Thus, agriculture"s share of the GDP needs to decrease from 8% to 5%, while the services" share needs to increase from 52% to 55%. All these steps require the Government"s support.