Romania has slim chances to control its widening current account deficit, World Bank says

Romania and Bulgaria will not succeed in tempering their widening current account deficits as their 2008 budgets do not have enough force to narrow inflation and the external unbalances, a release by the World Bank reads.

The international monetary body emphasizes the current account deficits represent the two countries' Achilles' heel, within an international economic stage which is collapsing. This issue is even larger for those countries with high level of debts in foreign currency.

The report notes current account deficits were covered through Foreign Direct Investments (FDI) in countries such as Bulgaria, Poland, Slovakia or the Czech Republic. Yet, in Romania this issue is solved through loans.

Total FDI in Romania amounted to 6.55 billion euros in the first 11 months of 2007 and covered 43 percent of the external deficit gathered in the same period. The FDI Romania saw in the first eleven months of 2007 plunged 21 percent year-on-year in 2007, as the previous year brought the country foreign investments of 8.3 billion euros.

NewsIn