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External debt increases and foreign direct investment flows decrease in Romania

posted onMay 16, 2017

In the first three months of 2017 Romania’s total external debt increased by EUR 815 million to EUR 93.19 billion, on the back of the rise in non-publicly guaranteed debt (by EUR 596 million) and public debt (by EUR 224 million), according to data provided by the National Bank of Romania (BNR).

Since 2010, the debt has grown strongly until March 2013, when Romania’s maximum foreign debt reached EUR 101.1 billion

Long-term external debt at end-March 2017 stood at EUR 68,968 million (74 percent of total external debt), almost flat from end-2016.

Short-term external debt at end-March 2017 amounted to EUR 24,224 million (26 percent of total external debt), up 3.5 percent against end-2016.

Long-term external debt service ratio ran at 16 percent in January – March 2017 against 27.4 percent in 2016. At end-March 2017, goods and services import cover stood at 6 months, as compared with 6.3 months at end-2016.

At end-March 2017, the ratio of the National Bank of Romania’s foreign exchange reserves to short-term external debt by remaining maturity came in at 90.3 percent, against 90.1 percent at end-2016.

In January – March 2017, foreign direct investment in Romania totalled EUR 1.075 million, down 22% compared to January-March 2016 of which equity (including estimated net reinvestment of earnings) amounted to EUR 1.258 million and intercompany lending recorded a net negative value of EUR 183 million.

In 2016 foreign direct investment (FDI) in Romania reached EUR 4.08 billion, its highest value since 2008, when FDI totalled EUR 9.5 billion.

According to the same BNR data, in the period under review (January – March 2017) the balance-of-payments current account posted a deficit of EUR 690 million, compared with EUR 314 million in 2016. The deficit on trade in goods widened by EUR 281 million, the secondary income and services surpluses narrowed by EUR 317 million and EUR 19 million respectively, while the deficit on primary income balance contracted by EUR 241 million.

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