figure alone would mean the economy is overheated. i usually present things in a more nuanced manner, just like they are in reality. what does overheating actually mean? a development that substantially exceeds the growth potential, leading to an overheating of output factors, especially to a chronic lack of labour force and a fast increase of wages and prices. for this year, i believe we need a sectoral approach. on the one hand, we have a significant rise in farming output due mainly to natural factors. and there is no overheating there. on the contrary, prices of most agricultural products are falling and production factors – especially land, but also labour force – are obviously underexploited. romania's great farming potential has yet to be turned to account. on the other hand, in construction, another major contributor to this year's growth, there are visible signs of overheating : scarce labour force, substantial increases of prices for building materials, higher wages, etc. of course, a wise policy should stimulate only the sectors where the potential is not fully exploited ( such as agriculture ) or where we have bottlenecks, as it is the case of road infrastructure in romania. however, there are numerous opinions according to which rating agencies could downgrade romania. which would be the main risk factors that could lead to a downgrade? so far, rating agencies have only changed the outlook, not the rating. to answer your question – although i do not believe that romania will be downgraded to below " investment grade " – the main risk factor remains the current account deficit. we have implemented tight monetary policies to tackle this issue. i believe that at the end of this year we will see a containment of this indicator to its 2007 figure of 14 percent of gdp as compared to some analysts'expectations of 15 - 16 percent. this is a positive thing for a start but we should not stop here. romania needs policies that would allow a gradual and predictable reduction of the current account deficit to levels almost entirely covered by direct capital investments to regain confidence of the rating agencies and ensure an improvement of external creditworthiness. we will be thus forced to implement a gradual correction of this deficit, even by a few percentage points in the next two to three years, and it is desirable that this happens in the context of sustainable economic growth, close to the potential, while consolidating disinflation which will resume this autumn after a few quarters of

since solvency ii was implemented, the range of asset types in ma portfolios has expanded substantially, including increased investments in a wide variety of illiquid loans and other forms of private credit. we estimate that annuity firms ’ holdings of assets other than corporate or uk government debt has grown, from around 15 % of assets backing annuities at the end of 2014, to around 45 % of ma portfolios at the end of 2020 [ 3 ]. the pra is attuned to the merits of these investments, both in terms of risk diversification for firms, and for the real economy of the uk. it is in that spirit that the pra has worked with the bpa sector over the last six years or so to support the safe growth of more diverse ma portfolios than was the case when the ma requirements were drafted. indeed, there is now a very wide range of assets in firms ’ ma portfolios as shown in chart 3. however, all assets are not equal in terms of the ma they generate with, for example, chart 4 indicates that current investments in student accommodation benefit from almost double the ma of current infrastructure holdings. whilst we would not expect all assets to achieve the same ma, these disparities do give rise to questions as to the extent to which ma benefit is excessively influencing investment choices : and whether those behaviours are prudent and delivering the best outcome for the uk economy. furthermore – chart 5 shows a relatively small proportion of firms ’ asset holdings are driving the majority of their ma benefit [ 4 ]. whilst firms are expected have a diverse range of assets matching their liabilities, this raises the question of whether the current ma framework adequately captures the risks and uncertainties associated with the unique and innovative assets that tend to be the most ma - efficient. naturally, investment in new asset types with some bespoke and novel features raises new and important questions for the prudential regulator : do firms have the right risk management capabilities and the governance to apply them rigorously and robustly? is the regulatory solvency regime suitable for them or is a square peg being forced to fit a round hole? the pra has always focused on ensuring that investments in these new asset types do not break the link between risk exposures and their valuation and capital requirements. the most notable example of this is the extensive work we have undertaken on equity release mortgages. the assessment of valuation and risk in assets with more bespoke features inherently requires more judgement