Romania's public debt continued to rise last year at a fast paceof 31.6%, amid massive state borrowing, and reached 194 billion RON(46 billion euros), accounting for 38% of GDP.
"The growth rate of the public debt is significant. And itslevel has neared 40% of GDP. The situation is made worse by thefact that the debt structure has a big short-term component, whichis more volatile. A problem we will have to solve is modificationof the debt structure by extending loan deadlines," commentsAurelian Dochia. Can Romania function without further boosting itspublic debt?
"The public debt is expected to stabilise. Now it is not smallat all. We are nearing the maximum bearable limit. The importantthing is to think why we are taking this debt on. If we boost thedebt to finance wage and pension spending, the markets can becomenervous. If we build motorways, it is not a tragedy," believesIonuţ Dumitru, chief economist of Raiffeisen Bank.
The Finance Ministry has managed to slightly reduce the budgetdeficit last year, but the fast rate of growth of the public debtand the weak prospects of economic growth remain the mainvulnerabilities.
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