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Risks Induced By The Trend And Level Of Foreign Debt In Romania

Author

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  • MILEA, Camelia

    (“Victor Slăvescu” Centre for Financial and Monetary Research, Romanian Academy, Bucharest.)

Abstract

The article presents some risks of external debt in Romania generated by its structure and characteristics. Given the rise in the share of short-term external debt, the associated risks increase, among which there is the augmentation in the volatility of the exchange rate of the national currency, the advance in the probability of a currency crisis and the vulnerability to interest rate fluctuations. The author calculates specific indicators from the economic literature in order to attain the paper’s objectives, namely, to see what the situation of Romania’s indebtedness is and if there is a vulnerability to an external debt crisis. In addition, other indicators are used to assess the debt characteristics of an economy. The values of the calculated indicators show that two shocks have been felt during the analysed period; the first is the economic-financial crisis triggered in 2008, and the other is the COVID- 19 pandemic. The results show that Romania is vulnerable to the outburst of a foreign debt crisis, with a risk of having problems regarding debt repayment. The methodology used joins the empirical analysis of statistical data and their interpretation, with the identification of correlations.

Suggested Citation

  • MILEA, Camelia, 2023. "Risks Induced By The Trend And Level Of Foreign Debt In Romania," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 27(4), pages 75-87, December.
    • Handle: RePEc:vls:finstu:v:27:y:2023:i:4:p:75-87
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    More about this item

    Keywords

    hazard; external indebtedness; vulnerability; crisis;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G01 - Financial Economics - - General - - - Financial Crises

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