Romania’s capital Bucharest and its surrounding area are economically fit to join the euro area as early as tomorrow, but the rest of the country still has a lot of catching up to do, central bank governor Mugur Isarescu said Thursday.
“If we were to look only at Bucharest and the surrounding Ilfov county, they could join the euro area very quickly, as they are as developed as Lisbon or Berlin. However, if you travel 100 kilometers further, there are less pleasant places,” Isarescu said.
The central bank’s chief said joining a monetary bloc entails a multitude of factors, including reaching a homogeneous level of economic and social development.
He said Romania would be theoretically ready to participate in the European Exchange Rate Mechanism (ERM) II as of this summer, once the annual inflation rate decelerates to the required level. However, there are other factors to consider before joining the euro area besides meeting the Maastricht criteria.
“Are we ready to converge and will we be able to accept the GDP growth constraint? Will we be able to borrow more cheaply, or will we end up borrowing at higher costs, just like with Spain or Italy?,” Isarescu wondered.
Another challenge would be converting prices in lei to euros, Isarescu said, mentioning that often eurozone prices are four to seven times higher than the prices of the same products in Romania.
The government said last week that Romania should meet in 2014 all the Maastricht criteria to converge to the euro area.
The authorities’ self-imposed deadline to adopt the European common currency was set for 2019.