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Challenges, Vulnerabilities And Ways Of Approach In Romania'S External Debt Sustainability

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  • Zaman Gheorghe

Abstract

The notion of a country's external debt, measured by a complex system of static and dynamic indicators, knows a lot of approaches and opinions in the literature, more or less convergent, complementary and advanced in terms of factors. Indicators of the external public and private debt on short, medium and long term provide a snapshot of indebtedness of the country and are the most researched domain in the literature, including national and international financial bodies, which adopt a series of classification criteria of countries in terms of size and dynamics of external debt. In this study, we intend to make an analysis of the volume, dynamics and structure of the current Romania's foreign debt, showing the challenges for national economic policies, present and perspective, the internal and external vulnerabilities and ways of approaching the external debt sustainability. According to the definition given by UNCTAD, a sustainable foreign debt is that level of debt which: - allows the indebted country to pay all current and future debt service without resorting to restructuring or rescheduling;- prevents accumulation of arrears and defaults;- in parallel provides an acceptable level of growth in the lending country. Until recently, Romania was considered a country with a low external debt. Currently, the situation has changed, meaning that this debt, somewhat neglected in the early transition period has become a serious threat to present and future sustainability of economic development in Romania. In general, external debt concerns financial and economic interests of all parties especially creditors and debtors, by the formula "win-win", so that, currently, some countries have surplus of balance of payments, usually the most developed and economically healthy, while others have deficits that, in extreme situations, can lead to inability to pay the debt, which means tough measures and policies, especially for the living standards of many generations of taxpayers.

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  • Zaman Gheorghe, 2011. "Challenges, Vulnerabilities And Ways Of Approach In Romania'S External Debt Sustainability," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(special), pages 11-44, July.
    • Handle: RePEc:ora:journl:v:1:y:2011:i:special:p:11-44
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    1. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(2), pages 379-408.
    2. Albu, Lucian Liviu, 2002. "Sustainability Function," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 5-14, June.
    3. Georgescu, George, 2007. "Current Account Deficits and Implications on Country Risk of Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 4(4), pages 88-96, December.
    4. Guillermo A. Calvo & Ernesto Talvi, 2005. "Sudden Stop, Financial Factors and Economic Collpase in Latin America: Learning from Argentina and Chile," NBER Working Papers 11153, National Bureau of Economic Research, Inc.
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    1. Mariana PAJA, 2015. "Public Debt Vulnerability Analysis," Eco-Economics Review, Ecological University of Bucharest, Economics Faculty and Ecology and Environmental Protection Faculty, vol. 1(2), pages 3-10, December.
    2. Georgescu, George, 2014. "Factori de creştere a sustenabilităţii datoriei publice [Drivers of increasing the public debt sustainability]," MPRA Paper 52957, University Library of Munich, Germany.

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