Romania’s gross external debt dropped by 4.2% y/y to €89.7bn (56% of GDP) at the end of January, the central bank said on March 15. The less volatile long-term debt dropped by 7.6% y/y to €69.9bn.
The overall trend indicates lower external public and private borrowing in recent years. The abundance of resources on the money market and in banks’ hands (reflected in their robust capital adequacy ratios) indicates the pattern could continue in the coming quarters, possibly years. However, the fiscal deficit is expected to widen this year and might put upward pressure on public borrowing.
Excluding the loans borrowed by the central bank from the International Monetary Fund (IMF) in 2009-2011 to bolster its reserves, the country’s long-term debt owed by public and private sector borrowers contracted by 6.1% y/y to €69.9bn. The loans from the IMF, which exceeded €10bn in 2011-2012, were fully repaid by the end of January.
At the end of January, the public long-term debt edged down marginally by 0.7% y/y to €30.6bn. It has stabilised over the past year as a result of the fiscal consolidation achieved in 2014-2015 when the budget deficit was significantly below 2% of GDP.
Notably, the private medium-term external debt decreased by 8.9% y/y to €32.5bn at the end of January. This was in line with a longer-term downward pattern of the private sector’s external indebtedness. Further deleveraging by foreign financial groups may partly explain this.
|GROSS EXTERNAL DEBT EUR mn||Dec-08||Dec-10||Dec-15||Jan-16||y/y||y/y|
|LT; direct public||9,054||16,184||30,929||30,590||-205||-0.7%|
|LT; publicly guaranteed||1,721||1,708||658||646||-424||-39.6%|
|LT; private: non-residents' deposits||5,467||8,228||5,197||4,995||-739||-12.9%|
|LT; IMF borrowings||0||9,083||122||0||-1,244||-100.0%|
|LT; SDR allocation - IMF||83||1,139||1,252||1,245||21||1.7%|
|TOTAL, less IMF loans||72,467||84,541||91,080||89,710||-2,670||-2.9%|