Central Bank official: Inflation could ease if fiscal consolidation policies continue to be implemented 

Inflation could ease by the end of the year if fiscal consolidation policies continue to be implemented, regardless of the political complexion of the government or the strategy adopted, while any departure from this course would be a major mistake, said Bogdan Neacsu, Chief Executive Officer of CEC Bank and Chairman of the Romanian Banking Association (ARB), at an industry event on Monday."We need to see what happens with the fiscal consolidation measures. It is very important that this policy of administrative reorganisation and improved discipline in public finances and budget execution be strengthened. Once we see such developments and continuity in this approach, we naturally expect inflation to moderate as well. Whether it will decline at an accelerated pace towards the end of the year remains to be seen, but the expectation is that it will ease and, of course, create the conditions, at least for next year, for a return to economic growth of at least 1.5% in GDP," the ARB chairman said.He added that he also expects economic growth to recover towards the end of the year."I expect economic growth to return. Moreover, we as banks are making every effort to help bring this about and to support the state in this endeavour, regardless of the political colour of the government or the strategy adopted. These measures must remain in place and we must strengthen this fiscal approach. It is in everyone's interest. We cannot go backwards; that would be a major mistake from this perspective," stressed the CEC Bank chief executive.From the banking sector's perspective, Bogdan Neacsu believes lending activity is likely to grow at a slower pace, while the non-performing loan ratio may rise slightly."I do not expect lending activity to maintain the same pace as last year. I expect a slower rate of growth, but lending activity will continue to expand. It is clear that the quality of loan portfolios is deteriorating. I expect the non-performing loan ratio across the banking system to increase, though not alarmingly. If we are currently talking about a non-performing loan ratio below 3%, we will probably exceed that level in the second half of the year. This is not something dramatic, but we should expect some increase.On the other hand, we are seeing solvency levels that allow us to absorb such shocks and maintain lending at what I would describe as an acceptable but prudent pace," Neacsu said.The 15th edition of the ZF Bankers Summit is taking place in Bucharest over three days and aims to discuss the challenges facing the banking sector and the Romanian economy in a geopolitical context marked by multiple crises and conflicts that are affecting economic growth and public confidence, against the backdrop of the urgent need to correct Romania's macroeconomic imbalances, including the fiscal deficit, trade deficit and current account deficit.