Romania must “carefully consider” its 2019 target for euro adoption because of large gaps in levels of regional development and uncertainty on economic overhauls, according to the head of the central bank.
Political forces in the European Union’s second-poorest member should agree on a plan with clear objectives to revamp areas including health care, infrastructure and education, Governor Mugur Isarescu told a conference in Bucharest on Monday. He called the 2019 goal “ambitious.”
“We can’t cross our heart and say we’re ready to join the euro zone, even though we meet all the nominal convergence criteria and the economy’s in the best shape I’ve seen in 25 years,” he said. “The goal can be an anchor but I’ve seen in the past how fast Romania can derail. We need a to-do list.”
Romania is the only country among the EU’s newest members to have set a specific target date to join the euro area. While it’s brought its budget gap within EU limits, the government has clashed with the 28-member bloc over planned tax cuts and is struggling to agree on a new precautionary loan in talks that also involve the International Monetary Fund.
“It’s time we do what we can to at least put the accord with the EU back on track as we’ve already postponed two reviews,” Isarescu said. Istvan Szekely, the EU’s mission chief to Romania, told the same conference that the 4 billion-euro ($4.3 billion) deal is currently “off track.”
The leu, which has strengthened 1.1 percent against the euro this year, was 0.1 percent lower at 2:52 p.m. in Bucharest, nearing the lowest level in a month on a closing basis. Yields on government debt due 2024 increased four basis points, or 0.04 percentage point, to 2.02 percent.