Romania’s gross external debt down 4.2% y/y to €89.7bn at end-January

Romania’s gross external debt down 4.2% y/y to €89.7bn at end-January
By Iulian Ernst in Bucharest March 16, 2016

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
1.        LT  51,875 74,075 71,056 69,944 -5,778 -7.6%
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 35,549 37,733 32,899 32,468 -3,187 -8.9%
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%
2.        Short-term  20,592 19,549 19,841 19,766 1,865 10.4%
TOTAL 72,467 93,624 91,202 89,710 -3,914 -4.2%
TOTAL, less IMF loans 72,467 84,541 91,080 89,710 -2,670 -2.9%
Source: BNR            

Data

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