RISKS INDUCED BY THE TREND AND LEVEL OF FOREIGN DEBT IN ROMANIA

The article1 presents some risks of external debt in Romania generated by its structure and characteristics. Given the rise in the share of short-term external debt, the associated risks increase, among which there is the augmentation in the volatility of the exchange rate of the national currency,...

Full description

Saved in:
Bibliographic Details
Published in:Financial Studies 2023-01, Vol.27 (4), p.75-87
Main Author: Milea, Camelia
Format: Article
Language:English
Subjects:
COVID-19
crisis
Currency
Debt restructuring
Debt service
Deficit financing
Economic crisis
Economic development
Economic growth
Exports
External debt
external indebtedness
Fixed exchange rates
Foreign exchange rates
GDP
Gross Domestic Product
hazard
Insolvency
Interest rates
International finance
Liquidity
Macroeconomics
Short term debt
Solvency
Sustainability
Volatility
vulnerability
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:The article1 presents some risks of external debt in Romania generated by its structure and characteristics. Given the rise in the share of short-term external debt, the associated risks increase, among which there is the augmentation in the volatility of the exchange rate of the national currency, the advance in the probability of a currency crisis and the vulnerability to interest rate fluctuations. The author calculates specific indicators from the economic literature in order to attain the paper's objectives, namely, to see what the situation of Romania's indebtedness is and if there is a vulnerability to an external debt crisis. In addition, other indicators are used to assess the debt characteristics of an economy. The values of the calculated indicators show that two shocks have been felt during the analysed period; the first is the economic-financial crisis triggered in 2008, and the other is the COVID-19 pandemic. The results show that Romania is vulnerable to the outburst of a foreign debt crisis, with a risk of having problems regarding debt repayment. The methodology used joins the empirical analysis of statistical data and their interpretation, with the identification of correlations.
ISSN:2066-6071