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Romania’s External Debt Sustainability Under Crisis Circumstances

Author

Listed:
  • GHEORGHE ZAMAN

    (Institute of National Economy, Romanian Academy)

  • GEORGE GEORGESCU

    (Institute of National Economy, Romanian Academy)

Abstract

Even if one could not say that governments and international organizations took the most appropriate rescue and/or stimulus packages, the worst effects of the financial crisis seem to be overcome. Signs of recovery occurred in the developed countries by the end of 2009, but the question of sustainability is arising. Romania was hit hard by the crisis in 2009, suffering a severe contraction of the economy, estimated at 7.1 percent. The worsening of the external and internal financial framework of Romania and the danger of a currency market crisis urged the need for a financing agreement with IMF. The study shows that, more or less, the parameters adapted for Romania. regarding the MLT external debt sustainability entered already the significant risk zone. In the baseline scenario, assuming favourable economic circumstances,an exit of Romania from this risk zone could be possible by 2015. In the alternative scenario, an excessive burden of external debt compared with financing resources needed to comply with the external payments obligations would maintain Romania on the brink of default risk. Supplementary risks associated with unfavourable developments of the external context and also with pressures coming from a non-restructured public debt could make the default situation even unavoidable.

Suggested Citation

  • Gheorghe Zaman & George Georgescu, 2010. "Romania’s External Debt Sustainability Under Crisis Circumstances," Romanian Journal of Economics, Institute of National Economy, vol. 30(1(39)), pages 5-38, June.
    • Handle: RePEc:ine:journl:v:1:y:2010:i:39:p:5-38
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    References listed on IDEAS

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    1. Zaman, Gheorghe & Georgescu, George, 2009. "Structural Fund Absorption: A New Challenge For Romania?," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 6(1), pages 136-154, March.
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    Cited by:

    1. Bianca AVRAM POP & Simona SABOU, 2018. "The Role Of Agriculture In Romanian Development," Business Excellence and Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 8(1), pages 5-18, March.
    2. Zaman, Gheorghe & Georgescu, George, 2014. "Romania’s external debt threats," Working Papers of Institute for Economic Forecasting 141215, Institute for Economic Forecasting.
    3. Anișoara Niculina APETRI, 2018. "Quality Costs and their Financial Implications on the Performance of Organisation," Book chapters-LUMEN Proceedings, in: Carmen NĂSTASE (ed.), The 14th Economic International Conference: Strategies and Development Policies of Territories: International, Country, Region, City, Location Challen, edition 1, volume 6, chapter 27, pages 304-319, Editura Lumen.
    4. Zaman, Gheorghe & Georgescu, George, 2011. "Sovereign risk and debt sustainability: warning levels for Romania," MPRA Paper 32924, University Library of Munich, Germany.
    5. Georgescu, George, 2016. "Prospects of Romania’s international investment position and financial stability risks," MPRA Paper 69501, University Library of Munich, Germany.
    6. Silvia DEDU, 2015. "The Impact of Solvency II Directive upon the Perspectives of the Horizon 2020 Programme," Romanian Journal of Economics, Institute of National Economy, vol. 41(2(50)), pages 145-155, december.
    7. GHEORGHE ZAMAN & Anca CRISTEA, 2011. "EU Structural Funds Absorption in Romania: Obstacles and Issues," Romanian Journal of Economics, Institute of National Economy, vol. 32(1(41)), pages 60-77, June.
    8. Nicoleta Georgeta Panait & Costin Alexandru Panait, 2018. "An Empirical Study on Public Debit in Romania," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 6(1), June.
    9. Nicoleta Georgeta Panait & Costin Alexandru Panait, 2020. "The Evolution of Public Debt of Romania in the Context of the Covid-19 Crisis," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 8(1), pages 52-56, May.

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    More about this item

    Keywords

    international financial crisis; global recession; anti-crisis measures; public debt; external debt sustainability; country default risk;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
    • G01 - Financial Economics - - General - - - Financial Crises
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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