Romania does not fulfill Eurozone convergence criteria regarding inflation, exchange rate, fulfills rest

Romania has not fulfilled two of the five nominal convergence criteria for adopting euro, namely those regarding inflation and exchange rate, but it fulfilled those regarding budget deficit, public debt and long-term interest rates, the Convergence Report published on Wednesday by the European Commission shows.

Romania does not fulfill criterion regarding the stability of prices. The median inflation rate in the past twelve months, until April 2014, was 2.1 percent, over the reference value of 1.7 percent, calculated as the median over the last twelve months in Lithuania, Portugal and Ireland (e.n. — the best performing countries in the EU) plus 1.5 percent. Furthermore, the EC estimates indicate that inflation will remain over the reference value in the coming months, the EC report shows.

However, the inflation rate will remain low in 2014, sustained by the reduced costs of foodstuffs, but will rise in 2015 as a consequence of the return of internal demand. "The EC's spring projections show an average monthly inflation rate of 2.5 percent in 2014 and 3.3 percent in 2015", the report mentions.

On the other hand, the relatively low prices of Romania (54 percent of the Eurozone average in 2012) show a significant potential of convergence on a long term.

In what regards the exchange rate, the EC report shows that our country does not fulfill this criterion.

The Romanian leu did not participate in ERM II, but traded under a flexible exchange rate regime involving a managed floating of the currency that allows interventions of the central bank on the market value, the report shows.

After the international financial crisis at the end of 2008, beginning of 2009, the leu has stabilized and was traded usually in...