CHALLENGES, VULNERABILITIES AND WAYS OF APPROACH IN ROMANIA'S EXTERNAL DEBT SUSTAINABILITY
Gheorghe Zaman ()
Annals of Faculty of Economics, 2011, vol. 1, issue special, 11-44
The notion of a country's external debt, measured by a complex system of static and dynamic indicators, knows a lot of approaches and opinions in the literature, more or less convergent, complementary and advanced in terms of factors. Indicators of the external public and private debt on short, medium and long term provide a snapshot of indebtedness of the country and are the most researched domain in the literature, including national and international financial bodies, which adopt a series of classification criteria of countries in terms of size and dynamics of external debt. In this study, we intend to make an analysis of the volume, dynamics and structure of the current Romania's foreign debt, showing the challenges for national economic policies, present and perspective, the internal and external vulnerabilities and ways of approaching the external debt sustainability. According to the definition given by UNCTAD, a sustainable foreign debt is that level of debt which: - allows the indebted country to pay all current and future debt service without resorting to restructuring or rescheduling;- prevents accumulation of arrears and defaults;- in parallel provides an acceptable level of growth in the lending country. Until recently, Romania was considered a country with a low external debt. Currently, the situation has changed, meaning that this debt, somewhat neglected in the early transition period has become a serious threat to present and future sustainability of economic development in Romania. In general, external debt concerns financial and economic interests of all parties especially creditors and debtors, by the formula "win-win", so that, currently, some countries have surplus of balance of payments, usually the most developed and economically healthy, while others have deficits that, in extreme situations, can lead to inability to pay the debt, which means tough measures and policies, especially for the living standards of many generations of taxpayers.
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