The Government and central bank BNR have not come up with any new target for Romania to join the eurozone since it became clear that the 2015 target was going to be missed, in part because of turmoil in Europe.
Analysts expect Romania to join the euro in 2018 at the earliest, but most of them see 2021 as more likely, considering the stage of structural reforms and of economic fundamentals that don’t allow for the gaps to be bridged within a shorter span. Romanian Prime Minister Victor Ponta recently said 2018-2020 was a realistic timeframe for joining the euro and that Romania was carefully watching Poland, a much more advanced country in terms of structural reforms.
“If we rush into joining the euro zone without converging in real terms regarding living standards and work productivity, we will not be able to deal with potential shocks that could appear from outside or from within the euro zone. A country needs to be prepared when it joins the eurozone, because once it is in, it cannot evolve. If you are very weak, you cannot cope with competition,” said Lucian Croitoru, advisor to the BNR Governor at the annual conference organized by the Romanian Financial-Banking Analysts’ Association (AAFBR).
Romania needs economic growth of over 2% in order to persuade the club of the eurozone, analysts believe.
“Economic growth of at least 3-4% is absolutely necessary in order to have real reasonable convergence and not very far into the future. Real convergence is not something that just happens. There is a lot more to do in terms of structural reforms. If the eurozone economy and the European economy are growing by 1-2% and Romania’s economy is also growing by 1-2%, there is no convergence,” says Ionut Dumitru, chief-economist of Raiffeisen Bank.
Analysts have adjusted their economic growth forecasts for this year towards 2.5-3% after last year the economy grew by just 0.7%. But a very good agricultural performance conceals a significantly poorer performance of the economy in 2013 than in 2012, as some analysts say.
In terms of the nominal convergence criteria in the Maastricht Treaty, Romania meets criteria on budget deficit, public debt and inflation and fails to meet the criterion on long-term interest rates, which exceed the limits set by European officials by almost two percent.
But the main obstacles to adopting the euro concern real convergence criteria, the low GDP per capita and the structure of the economy, where agriculture makes up 6-7% of GDP, but uses a quarter of Romania’s workforce.
(English version by Daniela Stoican)