Isarescu on IMF arrangement: We need a devil's advocate to sell the fiscal reform credibly

Romania needs an arrangement with the international financial institutions in order to sell credibly the fiscal reform it intends to implement by modifying its Tax Code so as to avoid losses by having to borrow at higher interest rates, according to Governor of the National Bank of Romania (BNR) Mugur Isarescu.

Photo credit: (c) Radu TUTA / AGERPRES PHOTO

"From my experience, I believe it is better for us to have some international partners. They lend us some credibility and seriousness, and sometimes a devil's advocate is also needed, in my opinion. Even if negotiations are at times unpleasant ? there are times when you may argue with them ? a partnership formula that includes them is good. Besides, I cannot see how we could credibly sell a fiscal reform of such magnitude internationally. That is tough," Isarescu told a conference where he released the latest inflation report of BNR.

His statement came in reply to a question about the opportunity of Romania staying under an arrangement with the IMF, given that an ongoing arrangement is set to expire this September.

As far as fiscal reform goes, Isarescu argued that if it fails to be credibly advocated, all that is won from fiscal reform is lost on interest rates.

"As you could see, one of the points that make the Treasury fare so well in terms of surpluses is a drop in interest spending," said Isarescu. AGERPRES