Foreign debt keeps low profile

Romania still has the lowest foreign debt level in the entire region, as the medium- and long-term foreign debt totalled 13.9 billion euros at the end of May, down 3.8% since December 2002.

Under the circumstances, Romania’s foreign debt could account for no more than 31% of the Gross Domestic product this year, as well.

However, foreign debt climbed 700 million euros in June, up to 14.6bn euros, following an eurobond issue maturing in seven years.

The state guaranteed foreign debt is also to grow in the second half, when two loans worth $160m and aimed at the power sector are to be contracted. The public and public guaranteed foreign debt were worth 8.8 billion euros by the end of May, with the private foreign debt standing at 5.193bn euros

The public and public guaranteed debt account for 62.9% of the total, still a high percentage, despite having dropped 3.4% since the end of last year.

The foreign debt service for the first five months exceeded one billion euros, with 270 million euros paid in the account of the public debt, 386 million euros for the state guaranteed debt and some other 437 million euros for the foreign debt contracted by companies.

The payment of debts contracted by the state over the last years has been scheduled so as to avoid significant peaks. Problems may occur for the foreign debt of the private companies, since there is no clear evidence of the loans’ maturity. This may lead to some pressure on the ROL exchange rate, as the foreign currency demand will increase when payments are due. The medium- and long-term foreign debt-service rate went down 18.2% at the end of May this year, as compared with 21.4% at the end of 2002, as exports continued to grow. razvan.voican@zf.ro