Trade balance deficit adds to current account imbalance

The current account deficit of Romania’s balance of payments went up 281 million euros in June, reaching 1.246 billion euros in the first half, up 27.3% since the year-ago period, according to data presented by the National Bank of Romania (NBR).

As compared to the first five months, the bulk of the negative account was registered in international trade.

The trade balance deficit increased 324 million euros to 1.556 billion euros, up 290 million euros as compared to the January-June period of last year. Current transfers maintained the last years’ trend, as they still have the highest surplus of all the current account components – the positive balance climbed 170 million euros in June, to 721 million euros (60 million euros more than in the year-ago period). Medium and long-term foreign debt shrank 2.6% as compared to December 2002, although it climbed about 200 million euros in June, to a total of 14.2 billion euros.

Public and publicly-guaranteed foreign debt came to 8.933 billion euros, whereas private foreign debt stands at 5.274 billion euros. The foreign debt service rose 316 million euros in June, to 1.4 billion euros, with 367 million euros accounting for public debt payments, 495 million euros for state-guaranteed debt and 547 million euros for private debts.

The fast-paced current account deficit growth does not come as a surprise, since the lending increase was expected to fuel an imports boom, with this trend likely to continue, considering the weak domestic supply.

According to the agreement Romania signed with the International Monetary Fund, the current account deficit is supposed to account for 4.5% of GDP at the end of the year. oana.nuta@zf.ro