The right moment for Romania to join the euro zone has been discussed over and over in the last few years, with several deadlines suggested for it.
Prime Minister Victor Ponta said at the end of last year that a good moment to adopt the euro would be 2018, the year when Romania celebrates 100 years from its Great Unification of 1918. Yet some high-ranking officials have mentioned dates that are even further in the future.
The question remains how prepared Romania will be to take the euro step in 2019, as analysts say this is a really bold target.
“It’s extremely important that all these economic achievements be sustainable, that we be able to carry out the convergence plan that we undertook to for Romania to match the economic and social standards of the EU, and the goal of joining the euro zone in 2019 to be attained,” Premier Victor Ponta said on Wednesday before the government session.
The Romanian authorities will send the convergence program to Brussels as they have done every year and it remains to be seen if there is any mention of 2019 as the euro adoption target. Last year’s document did not specify any date. The convergence program was not included on the list of normative acts approved by the government on Wednesday.
In terms of Maastricht criteria, such as inflation, interest rates, stability of the exchange rate, budget deficit and public debt, Romania will be theoretically ready to take the preliminary step of the euro adoption, the Exchange Rate Mechanism II (ERM II) this summer. Meeting such criteria is not enough, because more have to be fulfilled such as narrowing the living standards gaps, as Romania’s central bank governor Mugur Isarescu himself said.
The main problems when it comes to euro adoption are the real convergence issues, such as the gross domestic product per capita, which is only half of the EU average.
Most analysts have said in the past year that they see 2021 as more likely for the euro adoption, considering the progress of the structural reforms and the economic fundamentals that do not allow the country to close the gaps in a shorter time frame.
“I think 2019 is an ambitious target. The economy has significantly adjusted since 2009 and may shortly meet the nominal euro zone accession criteria. Yet the GDP per capita in Romania stood at only 50% of the EU average at the end of 2013, and the projected growth is not enough to ensure convergence by 2019,” said Mihai Patrulescu, senior economist of UniCredit Tiriac Bank.
Analysts and even representatives of international financial institutions said on various occasions that a country like Romania would need economic growth of at least 4% a year to be able to narrow the structural gaps and converge towards the euro zone living standards.
Romania’s economic growth reached 3.5% last year and analysts expect the country’s GDP to increase again in 2014, this time by 2% to 3.5%.
(English version by Loredana Fratila-Cristescu)