Radio România Internațional

Tag: public debt

  • Trade balance deficit on a downward trend

    Trade balance deficit on a downward trend

    Traditionally an importer, post-communist Romanias economy buys more than it sells, and the trade balance deficit is a chronic issue. The first seven months of 2023 promise, however, slight corrections. In this interval, the deficit stood at 15.6 billion Euros, 17% lower than the same period last year, show data published by the National Institute of Statistics. Romanias exports totaled 55 billion Euros, 4.6% higher than in the same period of the previous year. At the same time, between January 1 and July 31, 2023, Romania imported goods worth 70 billion Euros, down by 1.1% as compared to the similar period of 2022. Important shares in the structure of commercial exchanges are held by cars and transport equipment (44.8% for export and 36.3% for import) and by other manufactured products (30.3% for export and 29.2% for import).



    The Romanian economy remains strongly anchored in the trade flows of the European Union. The value of intra-EU27 goods exchanges in the first seven months of 2023 was over 40 billion Euros for exports and 52 billion for imports, accounting for 72.8% of the total exports and 73.6% of the total imports. The value of extra-EU27 exchanges was almost 15 billion Euros for exports and over 18 billion for imports, accounting for 27.2% of the total exports and 26.4% of the total imports. A few days ago, the Fitch rating agency reconfirmed Romanias sovereign rating at BBB minus, with a stable outlook. The decision is supported by capital flows from the European Union, which support investments and the country’s macroeconomic stability, as well as by the positive evolution of the GDP per capita and indicators of governance and human development, which are at higher levels as compared with other countries from the same rating group. According to Fitch, the Romanian economy will register a 2.9% growth this year and 3.2% next year.



    The Finance Minister, Marcel Boloş, wrote on his Facebook page that the Fitch Agencys decision to reconfirm Romanias sovereign rating is a strong signal that the country is on the right track and is regarded with confidence by international investors. Experts argue, however, that Romanias rating could be improved, if the authorities manage to reduce the budget deficit and the public debt in the medium term. The international economic press writes that Romania now wants to raise approximately three billion Euros from the international markets, through the third sale of bonds this year. The Romanian government exceeds its loan target, in the context in which, it will most likely need more funds to finance a larger budget deficit, the foreign experts conclude. (LS)

  • Changes to the insolvency law

    Changes to the insolvency law


    The Romanian government has issued
    an emergency decree to modify the insolvency law. According to Prime Minister
    Viorica Dancila, the changes are meant to put an end to abusive practices such
    as repeated insolvency seeking to evade the payment of obligations to partners
    and the state budget. More than 6,000 companies employing over 64,000 people
    are in insolvency at the moment. The government’s decree provides for the
    conversion of debts into shares to be taken over by the state. The finance
    minister Eugen Teodorovici says the tax authority will put in place a clear
    procedure in this regard. The business community has criticised the measure
    saying there’s no place for the state in a private company, while experts on
    insolvency speak about masked nationalisation. Eugen Teodorovici has explained
    that the changes to the insolvency law were meant to address the dysfunctions
    triggered by the application of previous versions of the law:


    These dysfunctions have caused budget arrears of more than 63 billion
    lei (13.5 billion euros) from the companies in insolvency, while only 6% of the
    sums owed to the body of creditors have been recovered. We can also add here
    the arrears to the lending companies in the private sector. We must allow for
    the conversion, reduction or transfer of the debts to the budget, under certain
    circumstances, of course, in order to prevent the bankruptcy of many companies
    with a real potential of recovery and other serious social and economic
    consequences.


    The finance minister has also said
    that the regulations proposed aim to ensure the necessary conditions to allow
    for the recovery of companies so that they continue to operate and thus protect
    public funds through the recovery of the money owed to the state budget. The
    main changes to the insolvency law also include greater responsibility for
    insolvency administrators and more accountability for debtors in the management
    of their companies. Other changes refer to the fact that the request to start
    the procedure will be rejected if the National Agency for Fiscal Administration
    has not been notified in this regard. According to data published on the
    website of the National Trade Register Office, the number of commercial
    companies and authorized natural persons in insolvency dropped by almost 2.5%
    in the first 8 months of the year compared with the same time last year. Most
    of them are in Bucharest, while the areas most affected by insolvency are
    retail and wholesale trade and car and motorcycle repair services.

    (Translated by C. Mateescu)

  • Statistics Regarding Romanian Economy

    Statistics Regarding Romanian Economy

    According to data made public by the Statistical Office of the European Union, Eurostat, Romania is one of the EU countries with the lowest public debts and pretty small budget deficits in 2014, against rising averages across Europe, in particular in the Eurozone. Although in the past four years Romania’s state debt has increased by some 16 billion Euros, it still remains low as compared to other EU countries.



    Eurostat data show that in 2014 Romania’s public debt stood below the rate of 40% of the GDP, being the fourth lowest after Estonia, Luxembourg and Bulgaria. At the opposite pole there stood Greece, with a debt accounting for 175% of the country’s GDP, followed by Italy and Portugal, both with debts exceeding 130% of their GDPs. As regards Romania’s budget deficit, it significantly shrunk in four years, from 5.5% of the GDP in 2011, to 1.5% in 2014. Last year, the lowest budget deficits, calculated as a percentage from the gross domestic product, were registered in Lithuania, Latvia and Romania.



    Also in 2014, Denmark, Germany, Estonia and Luxembourg exceeded the 3% of the GDP limit set under the Maastricht Treaty. Ranking first were Cyprus, Spain, Croatia and Great Britain. Eurostat figures also show that in 2014 Romania’s revenues to the state budget accounted for some 33% of the GDP, with expenditure standing at around 35%. The data was made public in the run-up to the country recommendations to be made by the European Commission in May, on the basis of the information provided by the EU countries for the 2011-2014 period.




    Just a few days ago, the Chief-Economist of the National Bank of Romania, Valentin Lazea, stated that for Romania to join the Eurozone agreement, its GDP per capita based on purchasing power parity should exceed 63% of the EU average. In 2014, the GDP per capita in Romania was 55% of the EU average. Lazea explained that the poorest countries in the EU allowed to join the Eurozone were Estonia, with a GDP per capita accounting for 63.4% of the EU average, and Latvia, with 63.8%. It is therefore very unlikely that the EU will accept another candidate with a GDP per capita lower than those rates, because that would mean trouble for both the country concerned and the EU in general, Valentin Lazea also said. In his opinion, in order to reach a rate of 63%, Romania’s economy should grow by 2% for seven years in a row.