Five months through the year, Romania's current account deficit had gone beyond one billion dollars. If calculated in euros, the imbalance had reached 967 million euros, up 46.7% from the same time last year.
The deficit rise was of 403 million euros in May alone, primarily because of the pressure from the trade balance deficit, which had gained 416 million euros.
The increase in the labour, direct investments, portfolio investments and interests-related revenue deficit by no less than 101 million euros to 286 million euros was yet one more factor.
Under the circumstances, the main financing source of the current account - the foreign currency inflows in form of current transfers, can no longer cope.
Even though having gone up by 166 million euros in May, the total amount sent back home by the Romanians working abroad reached only 551 million euros in the first five months of the year, down nearly 10% from the same time last year. The service balance saw a 22 million-euro deficit, nearly double the level posted at the end of April, which reversed the positive trend in the first three months of the year.
The current account deficit's growth pace is no surprise, considering the more lenient lending terms were expected to fuel a speedy import growth, which stands every chance of maintaining, due to the poor domestic supply.
According to the agreement with the IMF, the current account deficit should not go over 4.5% of GDP, after having kept at less than expected last year, i.e. 3.6% of GDP. Romania's highest current account deficit in the last 13 years was seen in 1998, when it reached about three billion dollars. This year, however, stands chances of breaking that record.
Considering the IMF's concerns, the fast-paced growth of the current account deficit in May must have probably been even higher in June, due to the trade balance deficit. razvan.voican@zf.ro
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