Romania''s medium and long-term foreign debt in March overshot the 20 billion euro threshold, rising 13% in just three months, according to NBR data.
The fastest growth in debt over the period was seen for debt contracted without state guarantees, which climbed by 15% to over 8.8 billion euros. As a result, public and publicly-guaranteed foreign debt as a proportion of total debt continued to fall, reaching 52.1%, down from 55.5% at the end of 2004.
First-quarter due instalments and interest payments linked to non-guaranteed debt came to 335 million euros, half the level of Romania''s total foreign debt service.
The level of foreign debt reached by March 31 of 20.5 billion euros represents a rounded figure, however the amount of debt as a proportion of gross domestic product has fallen constantly over the last two years and is tending towards 16% of GDP. Over five years, foreign debt has barely doubled, while in some countries of the region it has already exceeded 60% of GDP. Debt in foreign currency has enjoyed a boost given the local currency''s prospects for appreciation, which has eased repayments.
Nonetheless, even NBR Governor Mugur Isarescu, with one eye on the financing requirements of real convergence with the European Union, has drawn attention to the extremely low level of foreign debt.
Throughout 2004 the Romanian state had no presence on foreign capital markets in the form of eurobond issues. "We are being forgotten", said Isarescu.
Finance Minister Ionut Popescu has announced plans for a eurobond issue this year that will be worth around one billion euros and will serve to restructure older issues, extending the maturity of the debt. "We have begun discussing with various banks regarding restructuring, but we are yet to settle whether this step is necessary".
Besides the effective contracting of foreign credits, the central bank has begun including the growing value of medium and long-term deposits made by non-Romanians in Romania into the foreign debt. At the end of March, this amount reached 963 million euros, 2.5 times higher than on December 31 last year.
Although it formally opened up access to foreigners to ROL-denominated deposits on April 11 of this year, the NBR believes a significant volume of foreign capital had already entered Romania before liberalisation by means of "special purpose vehicles" in order to benefit from interest rate differentials. razvan.voican@zf.ro
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