The debt had slid to a low of EUR15 billion in January 2010, a level that had not been reached since early 2007. However, it has since resumed its upward trend. The volume of loans climbed by EUR1 billion during the November 2010-April 2011 period alone.
“In the first quarter, for which we have detailed data, the increase came on the rising government borrowing. Data show foreigners bought around 28% of the notes issued in the first quarter,” says Dan Bucsa, chief-economist with UniCredit Tiriac Bank.
He notes that in the first quarter, with the exception of the state, no other category, the central bank (BNR), commercial banks or private companies, increased its foreign debt.
Nevertheless, the bulk of short-term foreign debt still rests with banks, which during boom years attracted funds from their foreign parent banks to fuel lending in Romania.
Thus, banks in late March had EUR6.7 billion worth of funds raised from abroad, down, however, by around EUR300 million from December 2010.
Companies kept their short-term debts almost steady during the first quarter, at EUR4.6 billion. Instead, the government expanded its debt by over EUR700 million, to EUR2.2 billion.
“As long as yields stay high, I do not believe there will be any problem related to debt rollover,” Bucsa says.
After the rapid leap of recent months, the short-term debt came to account for 59% of the central bank’s foreign currency reserves, of EUR32.7 billion.