Mugur Isărescu: 10 years since the launch of Ziarul Financiar Speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, on the occasion of 10 years since the launch of Ziarul Financiar, Bucarest, 16 December 2008. *  *  *  It is a great pleasure for me to be present at this special anniversary of Ziarul Financiar. The one-decade long presence of this prestigious economic daily newspaper overlapped a turbulent period in the history of Romania. Allow me to dwell for a while upon a series of events that occurred shortly after the release of the first issue of Ziarul Financiar. In the wake of the crises in Russia and Southeast Asia, Romania’s need for external financing was much more difficult to cover, while the then level of foreign currency reserves left the authorities with little room for manoeuvre. Back then, the same as today, the rating agencies were extremely cautious in assessing Romania’s country risk, and according to the headlines disseminated obsessively by international agencies for over a year, Romania would have faced an imminent payment default. At that moment, the situation became even more complex due to the fact that the International Monetary Fund resorted to a new approach to indebted countries, called P.S.I. (private sector involvement) or “burden sharing”. This approach, which was tested in four countries including Romania, proved to be a failure, and the IMF later abandoned it.
I was head of government during the critical period of 1999-2000 and I know exactly how difficult it is to adjust domestic consumption, even by two percentage points of GDP only. This time, the difficulty posed by the adjustment will be perceived as rather big, because it must be accomplished after several years of significant increases in consumption. The trend seemed to go on forever, which led to the decoupling between aspirations and real possibilities to fulfil them. Therefore, it is adequate to adjust domestic demand sooner rather than later, as long as we still enjoy a marked economic growth, given that at this point adjustment implies only resizing and not amputation. An essential issue that the Romanian society must solve without delay refers to what should be adjusted first: consumption or investment. I realise that we must ponder on this matter. The question is whether we should opt for buying an increasing number of cars or set aside resources in order to build the adequate road infrastructure. In a few years, the former choice could lead us to a total traffic jam, and the only additional consumption left for us could be that of carbon monoxide released by the exhaust pipes. This example is not only metaphorical.