The current account deficit of Romania's balance of payments maintained its explosive growth trend in the first month of this year.
It amounted to 108 million euros in January 2004, which is nearly four times higher than in the corresponding period of last year.
The soaring deficit was mainly due to the doubling in the trade deficit that reflects the gap between exports and imports of goods and services, which reached 202 million euros compared to 105 million euros in January 2003. Current transfers, which show how much money the Romanians working abroad sent back home, covered but a small part of the increase in the difference between imports and exports, reaching 120 million euros in January compared with 98 million euros a year ago.
The increase in the current account deficit marks, as President Ion Iliescu himself said, the failure of an economic policy that targeted replacing domestic production with imports. The respective economic policy was applied without its promoters thinking where to get the resources to cover imports from, the head of state on Monday said.
"I do not think that restricting access to consumer credits will be enough to address the current account deficit issues in the medium and long run," Iliescu said. The National Bank hardened consumer lending terms as of February precisely because it wanted to contain the pressure put on the exchange rate by the import growth.
The service balance saw a 9 million euro deficit in the first month of 2004 compared with a 14 million euro surplus a year ago. The current account is a synthetic indicator gauging inflows and outflows of foreign currency related to the trade in goods and services, flows of revenues and current transfers.
The foreign medium and long-term debt at the end of January amounted to 15,345bn euros, up 0.6% from the end of 2003. The public debt and the debt secured by the State totalled 9.7bn euros, while the private debt was of 5.6bn euros. Foreign debt service was worth 179 million euros and the import coverage by National Bank's official reserve (currencies plus gold) went up to 4.6 months compared with 4 months in December 2003.
The current account of the balance of payments last year witnessed a 2.92bn euro deficit, accounting for 5.8% of the Gross Domestic Product, up 2.4% from the level registered in 2002. The authorities will try to contain the current account deficit within 5.5% of GDP this year.
vlad.nicolaescu@zf.ro
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