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18. 06. 12. - 21:00

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18. 06. 12. - 21:00

Basescu says no other path to recovery than austerity, deems stimulus as ‘fairytale’

Michael Leidig

President Traian Basescu said today (Mon) at a meeting with Philippe Le Houerou, vice-president of the World Bank (WB), that, in his view the current economic crisis will not end in the next 12 months and that there is no other way to recovery than austerity, local press reports. Basescu said that one cannot oppose austerity to the economic growth. "We are extremely convinced that this crisis will not disappear in the next year. We are facing ahead a period of difficulties on a medium and long term. On the other hand, Romania is one of the countries which are supporting the idea that in this moment we cannot talk about austerity versus economic relaunch. (…) we have to preserve first the macro-economic stability and only after start generating growth and not the opposite", Basescu said. ’This fairytale about stopping the austerity and stopping the focus on macro-economic stability and just throw the money on the table could be the biggest mistake that Europe could make and that could make Europe explode in the upcoming years. We have to preserve both, but the key is the macro-economic stability. We have the experience of 2007-2008 when we had growth by hampering the macro-economy’ Basescu declared. WB vice-president for Europe and Central Asia said that in his view the macroeconomic sustainability and growth are going hand in hand. He urged Bucharest for further reforms in order to support a long term economic stability. Le Houerou listed macroeconomic stability, competition and investments as the ingredients for Romania’s economic growth. In May, Romania went back into economic recessions, following two consecutive trimesters of negative GDP. Romania is the champion of austerity in the EU, following the most severe economic crisis in the past 20 years. In 2010, the right-wing government cut the public wages by 25 percent, increased the VAT from 19 to 24 percent, and taxed pensions with 5 percent. The dramatic austerity measures sent over nine million Romanians on the threshold of poverty, according to EU statistical body, Eurostat. The European Commission backs austerity as against economic stimulus for ending the economic crisis. The Eurotechnocrats are saying that the chests of the economic block are empty, but admit nevertheless that the US economy recovered faster from the 2008 cataclismic crisis due to the stimulus packages disbursed by the Obama administration.

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