Economist Adrian Negrescu believes that the issue regarding Romania’s increasing external debt is not the loans themselves, but rather the interest rates and, most importantly, how the money is used.
According to the specialist, in the last five years, Romania has borrowed over 200 billion euros, with most of the money going towards pensions and salaries.
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In other words, the economist mentions, "the prosperity proclaimed by politicians was artificially induced with financial infusions from loans." Negrescu believes this is "evidence of administrative recklessness, the sure path to a financial deadlock of proportions."
"Romania's total external debt continues to rise, and in November 2024, it exceeded the 200 billion euro threshold. Considering that the Ministry of Finance estimates that this year we will need to borrow over 46 billion euros, it is possible to surpass 250 billion. I have said it repeatedly. The issue is not necessarily that we borrow, but at what interest rate (the highest in the EU) and, most importantly, how we use the money," states economist Adrian Negrescu.
According to the specialist, investments represent less than 15% of the borrowed money, and of these, "aside from stadiums, sports halls/weddings, and other projects with no real economic impact," too few funds have been invested in transportation infrastructure, education, health, or military infrastructure.
"In other words, the prosperity proclaimed by politicians was artificially induced with financial infusions from loans. Evidence of administrative recklessness, the sure path to a financial deadlock of proportions. There are already increasingly alarming signals regarding Romania's narrowing credit margin.
More and more investors are avoiding Romania due to the lack of a coherent strategy for managing public debt and the budget deficit. From financial infusions of borrowed money, we risk soon going directly to intensive care and the shocks provided by the IMF," warns Adrian Negrescu.
Romania's external debt, at the end of November 2024, had exceeded 200 billion euros, according to a press release from the National Bank of Romania (BNR). Romania also had the largest current account deficit in the European Union.