The current account of Romania’s Jan. – Oct. 2016 balance of payments ran a deficit of 2.92 billion euro, up from the 2.66 billion euro registered in the first nine months of the year and almost three times higher than the 1.06 billion euro registered in the similar period of the year before, shows data released on Wednesday by the National Bank of Romania (BNR).
In the period of reference, the goods deficit was by 1.5 bln euro higher and the primary income deficit was also by 729 million euro higher; the surplus of the secondary revenues balance was by 262 million euro less and the surplus of the balance of services advanced by 633 million euro.
The speed-up in the increase of the current account deficit was also highlighted in the central bank’s Financial Stability Report.
“In the first three quarters of 2016, the current account deficit widened to approximately 1.6 pct of GDP (from a deficit of 0.7 pct of GDP in the interval January – September 2015). This trend is expected to persist in the next period, as the European Commission forecasts the additional widening of the current account deficit to 2.2 percent of GDP at the end of 2016, and to 2.6 percent of GDP at the end of 2017, against the background of the strengthened upward evolution of domestic demand, of consumption in particular,” the report states.
The central bank underscores that the current account deficit (2.6 billion euro over January – September 2016) is mainly the result of domestic consumption picking up speed.
BNR considers, however, that the current external deficit is sustainable, given that despite the rising trend, in real terms this indicator is nearly 10 times less than in 2007.
The country’s long-term external debt totaled 70.385 bln euro as of October 31, 2016 (76.3 percent of the total external debt), down 0.2 percent from December 31, 2015. The short-term external debt stood at 21.83 billion euro at the end of October (23.7 percent of total external debt), up by 9.8 percent from December 31, 2015.
Between January – October 2016, the total external debt increased by 1.78 bln euro. The public debt advanced by 1.568 billion euro, while the non-publicly guaranteed debt advanced by 533 million euro and the debt of the monetary authority also declined by 322 million euro.
The long-term external debt service ratio was 25.9 percent between January – October 2016 compared with 38.5 percent in 2015. The goods and services import cover was 6.5 months as of October 31, 2016, as to 6.4 months registered on December 31, 2015.
At the end of October 2016, the ratio of BNR’s foreign exchange reserves to the short-term external debt by remaining maturity was 93.7 percent, compared to 97.9 percent at the end of 2015.