The inflationary rate in 2002 was actually 21%-22%, considering the product and service basket used for calculating the consumer price index, which is not in line with the realities in Romania, the president of Banca Romana pentru Dezvoltare (Romanian Development Bank - BRD)- Societe Generale (SocGen), Bogdan Baltazar said. He is this way reiterating a series of suppositions voiced last year.
Baltazar, however, specified that regardless of the personal estimates of the bank management, BRD's budgets are built around the official data.
"If IMF itself with all its expert teams did not ask any questions because it understood the procedures do not allow for a single digit to be changed, then such theories are already bordering on something else," Leonard Cazan, Development and Prognosis minister, said.
He added even EUROSTAT, the European Union's statistics authority, had recently analysed the manner in which inflation is calculated in Romania without finding any problems.
In the opinion of the BRD president, the inflation announced for February 2003, 0.8%, in spite of the high energy and upkeep costs, might mean the inflationary target for this year would not be exceeded and might even go down to 10%-13%.
The Government is planning to keep within 13%-14% inflation this year, following the 17.8% increase in the consumer price index in 2002.
Baltazar explained that, as far as he was concerned, most of the economic growth in 2002 was achieved at the expense of arrears, finished product inventories and unfinished production. "Disinflation, which looks like it will go on, will make arrears an even heavier burden in 2003," Baltazar said.
Considering the Government's commitment to conduct a large-scale privatisation of the large state-run companies over the next two years, the BRD official says the debts these companies have to pay to each other and to the state budget will mature, so that most of them will be transferred to the public debt.
Romania, as the BRD president feels, is still not a really attractive country for extensive quality investments. He explains his opinion by saying that only 50% of the current account deficit is financed by foreign investment, which is less than one third of the actual absorption potential.
"The legislative framework and law enforcement are still difficult for legitimate businesses that want to evolve transparently and not feed corruption and the widespread fraud," Baltazar specified.
He then spoke of the investments on the capital market, which witnessed a significant development last year, due to the transparent legal framework.
At the same time, BRD's president feels the arguments used by the officials to justify the low foreign investment level do not hold water.
He thinks that, given the uncertainty of the international markets, Romania can be an interesting market for investors. "The authorities never seem to learn and keep shoving the dust under the rug," Baltazar concluded.
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