Current Account Deficits and Implications on Country Risk of Romania
This study focuses on the implications of current account deficit upon the external debt increase in Romania, revealing higher risks for the sustainability of its international financial position. Considering the trade deficit as a main cause of current account balance deterioration, several exports weaknesses are pointed out, mostly resulted from neglecting both slowing IPT flows and growing FDI stock adverse effects. Under the circumstances of diminishing contribution of compensatory flows to the current account deficit coverage, an increasing share of autonomous flows is expected. But an excessive rise in the long-term external debt, including its service level, could have negative effects on Romania’s country rating, i.e. on the external financing costs and borrowing ceiling of the international capital markets. For preventing a possible financial turmoil turning into a “hard landing” of the economy the Romanian, firstly by admitting the risks occurring from current account deficits and accelerated debt accumulation, by sound monetary and fiscal policies, promoting structural reform and exports.
Volume (Year): 4 (2007)
Issue (Month): 4 (December)
|Contact details of provider:|| Postal: Casa Academiei, Calea 13, Septembrie nr.13, sector 5, Bucureşti 761172|
Phone: 004 021 3188148
Fax: 004 021 3188148
Web page: http://www.ipe.ro/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Georgescu, George, 2007.
"Deficitul de cont curent: Maladie cronică a economiei româneşti ?
[Current Account Deficits: A Chronic Disease of the Romanian Economy?]," MPRA Paper 24851, University Library of Munich, Germany.
- Sebastian Edwards, 2004. "Thirty Years of Current Account Imbalances, Current Account Reversals, and Sudden Stops," IMF Staff Papers, Palgrave Macmillan, vol. 51(s1), pages 1-49, June.
- Georgescu, George, 2006. "Inward Processing Trade and Implications for the Balance of Payments Current Account (The Case of Romania)," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 3(1), pages 24-31, March.
- Sebastian Edwards, 2004. "Thirty Years of Current Account Imbalances, Current Account Reversals and Sudden Stops," NBER Working Papers 10276, National Bureau of Economic Research, Inc.
- Kaminsky, Graciela & Schmukler, Sergio, 2001.
"Emerging markets instability: do sovereign ratings affect country risk and stock returns?,"
Policy Research Working Paper Series
2678, The World Bank.
- Graciela Kaminsky & Sergio L. Schmukler, 2002. "Emerging Market Instability: Do Sovereign Ratings Affect Country Risk and Stock Returns?," World Bank Economic Review, World Bank Group, vol. 16(2), pages 171-195, August.
When requesting a correction, please mention this item's handle: RePEc:rjr:romjef:v:4:y:2007:i:4:p:88-96. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Corina Saman)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.