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April 19, 2024
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Economy Finance Romanian News

Romania’s External Debt Reaches New Record: EUR 168 Billion

In January – December 2023, Romania’s total external debt increased by EUR 25 billion to EUR 168 billion, of which:

  • long-term external debt in end-December 2023 ran at EUR 121 billion (71.8 percent of total external debt), up 22.8 percent against end-2022;
  • short-term external debt at the end-December 2023 amounted to EUR 47.6 billion (28.2 percent of total external debt), up 5.3 percent from the end-2022.

Romanians who lived during the communist regime compare the current Romania to Ceausescu’s period. In 1989, Nicolae Ceausescu, the former president of the country before 1990, announced that Romania had successfully paid its foreign debt entirely. Romania started accumulating foreign debt after the so-called Revolution in 1989, reaching a new record.

To better understand the situation, we only say that each Romanian, newborn, child or adult, has to pay close to 9,,000 EUR for this foreign debt to be covered. It’s quite huge and this offers a better snapshot of the context.

Not only that, but direct foreign investments dropped as well, and this is terrible news for the country and the economy. According to Romania’s National Bank, last year’s foreign investments totalled EUR 6,5 billion (compared with EUR 10 billion in January – December 2022), of which equity (including the estimated net reinvestment of earnings) and intercompany lending recorded net values of EUR 6.5 billion and EUR 39 million, respectively.

Meanwhile, according to Romania’s National Bank, In January – December 2023, the balance-of-payments current account posted a deficit of EUR 22 billion, compared with EUR 26 billion from January through December 2022. The breakdown shows that the deficit on trade in goods declined by almost EUR 3 billion, the surplus on services expanded by EUR 204 million, the primary income deficit decreased by EUR 9 million, and the secondary income surplus increased by EUR 143 million.

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