The VAT hike significantly affected the monetary policy trendand interrupted the central bank's cycle of cutting the monetarypolicy interest rate, with there even being the risk of a reversalin the trend pursued for around one year, says NBR governor MugurIsarescu.
"This country has been forced to raise VAT from 19 to 24%, byfive percent. This caused a major shock. It disrupted the economiccycle. It upset our entire cycle of cutting interest rates here atthe NBR and this is no trifle, to have a certain degree ofpredictability, to pursue a monetary policy target, and to bebrutally disrupted and run the risk of having to reverse the trendbecause of the inflation hike that follows such a measure," saidIsarescu at the "Romania, where is it headed? How do we bringconfidence back?," seminar organised at the NBR yesterday.
The governor brought up the lack of consistency as far aspolicies and messages from the Government and politicians areconcerned, exemplifying with the public rhetoric that currentlycites the significant VAT cut as a solution out of the crisis,three months after the decision to hike the tax. "We are totallyinconsistent as far as policies and messages are concerned," hesays.
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