Sovereign risk and debt sustainability: warning levels for Romania

Zaman, Gheorghe and Georgescu, George (2011): Sovereign risk and debt sustainability: warning levels for Romania. Published in: Non-Linear Modelling in Economics. Beyond Standard Economics (March 2011): pp. 234-270.

Abstract

Despite the governments took rescue and/or stimulus packages, signs of recovery occurring in 2009 and 2010, the global growth sustainability seems uncertain. Romania was hit hard by the crisis, suffering a severe contraction of the economy, estimated at 7.1 percent in 2009. The worsening of the external and internal financial framework of Romania and the danger of a currency market crisis urged the need for a financing agreement with IMF. The study shows that an excessive burden of external debt compared with financing resources needed to comply with the external payments obligations would maintain Romania on the brink of default risk. Collateral risks associated with unfavorable developments of Eurozone and also with pressures coming from a non-restructured public debt could make the default situation even unavoidable.

• Item Type: MPRA Paper
• Language: English
• Keywords: financial crisis; global recession; anti-crisis measures; public debt; debt sustainability; sovereign risk
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C10 - General; G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy; H - Public Economics > H6 - National Budget, Deficit, and Debt > H68 - Forecasts of Budgets, Deficits, and Debt; H - Public Economics > H6 - National Budget, Deficit, and Debt > H63 - Debt ; Debt Management ; Sovereign Debt; G - Financial Economics > G0 - General > G01 - Financial Crises; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E47 - Forecasting and Simulation: Models and Applications

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