Sovereign risk and debt sustainability: warning levels for Romania

Gheorghe Zaman and George Georgescu

MPRA Paper from University Library of Munich, Germany

Abstract: Despite the governments took rescue and/or stimulus packages, signs of recovery occurring in 2009 and 2010, the global growth sustainability seems uncertain. Romania was hit hard by the crisis, suffering a severe contraction of the economy, estimated at 7.1 percent in 2009. The worsening of the external and internal financial framework of Romania and the danger of a currency market crisis urged the need for a financing agreement with IMF. The study shows that an excessive burden of external debt compared with financing resources needed to comply with the external payments obligations would maintain Romania on the brink of default risk. Collateral risks associated with unfavorable developments of Eurozone and also with pressures coming from a non-restructured public debt could make the default situation even unavoidable.

Keywords: financial crisis; global recession; anti-crisis measures; public debt; debt sustainability; sovereign risk (search for similar items in EconPapers)
JEL-codes: C10 E44 E47 G01 G15 H63 H68 (search for similar items in EconPapers)
Date: 2011-03
New Economics Papers: this item is included in nep-tra
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Citations: View citations in EconPapers (18)

Published in Non-Linear Modelling in Economics. Beyond Standard Economics (2011): pp. 234-270

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:32924

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