Romania’s external debt rises by EUR 5,8 billion in the first seven months of 2022. More than half, over EUR 3 billion, was added in July alone.
Now with the problem of rising prices, of inflation that is continuously increasing, Romania is scraping the bottom of the barrel. Once the first country that managed to pay its foreign debts, Romania is borrowing mercilessly to cover the budget deficit.
A little more than one-third of the period’s current account deficit of EUR 14.9 billion was financed by the increase in the country’s external debt, which was somewhat more prominent than the FDI (EUR 5.5 billion).
In July, the long-term external debt service ratio was 13.3%, down from 16.4% at the end of 2021. At the end of July, the import cover for goods and services was 4.3 months, down from 4.9 months at the end of 2021. By remaining maturity, the BNR’s foreign exchange reserves increased from 81.9% at the end of 2021 to 76.6% at the end of July.
Due to worldwide inflation, Romania’s external debt has decreased concerning GDP, falling from 58.8% at the end of 2021 to 53.7% at the end of July. However, the ratio was only 47.5% at the end of 2019—before the government took on significant debt to address the Covid-19 situation.