Current and Long Run Challenges of Romania's External Debt Sustainability

The paper is trying to stress the high level of Romania's external indebtedness, both sovereign and private, associated with an unpredictable economic environment and an unfavourable global and regional context. The research objectives are mainly devoted to quantitative and qualitative assessments of the current and long run challenges of the external debt sustainability faced by Romania. The results of the study highlight inter-conditional ties between short-term and medium-long term debt, public and private debt, internal and external public debt. The increase in the long-term external debt stock (more than two times during 2007-2013) led to a significant rise in the related annual service (17.8% of GDP in 2013), deteriorating the financial framework of Romania and the growth perspectives. Excessive levels of the external debt and critical debt-to-GDP ratio are recorded in the case of Romania as compared to international standards. Despite large external borrowings, due to the lack of their efficiency, the results in terms of economic development are much below expectations. The easiness of recursion to external borrowings by the government and the debt rollover year by year contravene to intergenerational ethics.