“If lax monetary and fiscal policies were enough to spurt economic growth, then Zimbabwe should have the biggest economic growth, because it has the laxest monetary policy. The trouble is wisdom, centuries of economic management have shown lax fiscal and monetary policies are not the way to obtain economic growth. What makes matters worse is that there is currently a global trend saying this is the road to growth. Economists in general have thrown away centuries-old wisdom and are now trying to reinvent the wheel,” Lazea said Tuesday at a conference on euro adoption, adding this is his personal opinion.
He said situations are different in different countries and Romania can’t compare itself to strong countries that used to own empires, such as the UK or China, which can cover their domestic debt using assets held abroad.
The Romanian government put forth a draft Tax Code last week that includes several major tax cuts.
Lazea underscored euro adoption is tied to economic growth and structural reform.
Romania needs at least six years to reach a GDP per capita adjusted for purchasing power parity of 60% the EU average. At the end of last year, this indicator stood at 54% of the EU average.
On the other hand, Lazea reiterated a country can reach sturdy economic growth within or outside of the eurozone if it has good policies and reforms. He said Romania should enter ERM-2 at the beginning of 2016 if the country maintains its goal to join the eurozone in 2019.
Lazea also warned that once Romania joins the eurozone, structural reforms may never be relaxed or the country would end up like Greece or Portugal.
“Romania needs a profound cultural change on all levels of society. If Romanians want to live like the Germans, they have to think like them and work like then. (…) If you want to live like Germans, you can’t work like the Greeks,” said Lazea, adding he thinks the government should take unpopular measures.