Romania’s External Debt Sustainability Under Crisis Circumstances Authors∗:

bstract. Even if one could not say that governments and international organizations took the most appropriate rescue and/or stimulus packages, the worst effects of the financial crisis seem to be overcome. Signs of recovery occurred in the developed countries by the end of 2009, but the question of sustainability is arising. Romania was hit hard by the crisis in 2009, suffering a severe contraction of the economy, estimated at 7.1 percent. 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, more or less, the parameters adapted for Romania regarding the MLT external debt sustainability entered already the significant risk zone. In the baseline scenario, assuming favourable economic circumstances, an exit of Romania from this risk zone could be possible by 2015. In the alternative scenario, 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. Supplementary risks associated with unfavourable developments of the external context and also with pressures coming from a non-restructured public debt could make the default situation even unavoidable