Florin Georgescu and Eugen Dijmarescu, the two new nominees for the executive management of the National Bank, have been known to criticise central bank policy from time to time. It now remains to be seen whether they will succeed in imposing their views on the new membership of NBR Board of Governors.
Florin Georgescu, who is to become first vice-governor, is known to favour state intervention in the economy, does not back a tight monetary policy that would curb inflation and has never been a major supporter of the privatisation and restructuring plan. NBR has blamed the consistently high level of inflation precisely on the lack of such policies.
Back in December 2000, Georgescu, the co-ordinator of PSD's White Book, criticised the "weak supervision of the banking system by NBR" and the increase in central bank foreign currency reserves between 1997 and 2000 "at the expense of de-capitalisation of the Romanian economy and the worsening of the living standards for the vast majority of people."
Eugen Dijmarescu early this year criticised the exchange rate policy promoted by NBR, saying that the depreciation of the Romanian currency over time had turned out to be an ineffective export booster and had caused inflationary surges.
"Depreciation of the ROL no longer has an export boosting function, and instead increases the pressure for an increase in domestic prices. Given that production structure is largely based on imported supplies, this is a bad combination," Eugen Dijmarescu said in early 2004.
This spring, Dijmarescu said the deterioration of the trade balance was due to the dwindling competitiveness of Romanian producers, a lack of retooling funds and the "lack of an exchange rate policy to stimulate exports."
Dijmarescu stated at the end of the parliamentary hearings that he was going to the NBR fully aware of what Romanian companies needed, adding that his commerce-related activities had kept him in close contact with monetary policy.
At times, NBR policies have contradicted the policies that various governments were trying to promote.
Back in the days of the Vacaroiu Cabinet, when Florin Georgescu was Finance Minister, the NBR Governor Mugur Isarescu held many talks with Cabinet members regarding economic and monetary policy. Vacaroiu and Georgescu used to be more in favour of low interest rates and a low exchange rate, while Isarescu held that interest rates should be set by the market, and not imposed upon it, and that the exchange rate should be given free reign to reflect supply and demand and avoid the build up of tension.
There were times when the Vacaroiu Government imposed a specific foreign currency policy and would leave the exchange rate to be set by a group of four banks, three of which were state-owned - Bancorex, Banca Comerciala Romana (Romanian Commercial Bank - BCR) and Banca Romana pentru Dezvoltare (Romanian Development Bank - BRD). All these tensions came to a head in 1997, and the foreign reserve shrank dramatically following the use of dollars to bolster the exchange rate.
razvan.voican@zf.ro
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