News 06 Sep 12

Romania Committed to Joining Euro in 2015

Bucharest intends to stick to a 2015 deadline to adopt the European single currency, though experts are cautious about whether the country stands to benefit from adopting the euro.

Marian Chiriac

As economic conditions in the EU deteriorate, and uncertainty over the prospects of the bloc grow, President Traian Basescu has said that Romania remains ready to join the troubled single currency in 2015, as planned.

“Romania already satisfies most of the criteria for joining the eurozone, which is why it is important to remain firm behind our aim to meet the 2015 deadline,” Basescu said.

He maintained that adopting the single currency will help the country’s economic development.

Analysts are much more cautious about the possible benefits.

“The adoption of the single currency is good for a healthy economy, but this is not the case of Romania,” economic analyst Cristian Dinulescu said.

“Furthermore, in the short term, the costs will be higher than the benefits, as the country will have to continue austerity measures and not to invest more in economic development.”

Dinulescu added that Bulgaria’s recent decision to postpone its plans to adopt the euro was a wise one.

Sofia on Monday said it no longer saw the benefits of joining the troubled single currency, even 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.

The criteria in question were price stability, a more balanced budget, and a stable exchange and interest rate.

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.

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