Romania National Bank governor Mugur Isarescu: Salaries up too much as compared to productivity

Joi, 31 ianuarie 2008, 15:31 English | Business

Romanian National Bank (BNR) governor Mugur Isarescu has said in an interview for the Romanian public television, quoted by monitoring agency Rador, that the Romanian currency has been clearly affected by downward feelings among international investors about the situation in the country. He talked about the risks of salary boosts that cannot be economically supported as productivity is not keeping pace with individual income growth.

But Isarescu said that the market instruments can balance any disequilibrium pushed by higher salaries.

Isarescu argued that in Romania, like anywhere else, salaries need to be correlated by productivity and Romania does not comply to this pattern as it used to over the past several years.

He said he was confident the the national currency would gain back ground against the euro soon enough. He says that what Romania needs is a strict monetary policy characterized by structural reforms and fiscal prudence.