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Balance of payments and external debt – May 2020

14.07.2020

In January - May 2020p, the balance-of-payments current account posted a deficit of EUR 2,881 million, compared with EUR 3,414 million in the same year-ago period. The deficit on trade in goods widened by EUR 921 million, the surplus on services increased by EUR 379 million, the primary income balance recorded a positive contribution of EUR 513 million, and the surplus of the secondary income balance rose by EUR 562 million.

Balance of payments current account (EUR million)
  January - May 2019p January - May 2020p
CREDIT DEBIT BALANCE CREDIT DEBIT BALANCE
CURRENT ACCOUNT (A+B+C) 42,495 45,909 -3,414 36,864 39,745 -2,881
A. Goods and services 37,239 40,363 -3,124 31,542 35,208 -3,666
a. Goods 26,851 33,315 -6,464 21,943 29,328 -7,385
b. Services 10,388 7,048 3,340 9,599 5,880 3,719
- manufacturing services on physical inputs owned by others 1,247 66 1,181 954 71 883
- transport 3,195 1,384 1,811 2,799 1,153 1,646
- tourism-travel 1,043 1,944 -901 534 1,195 -661
- other 4,903 3,654 1,249 5,312 3,461 1,851
B. Primary income 3,174 3,599 -425 3,076 2,988 88
C. Secondary income 2,082 1,947 135 2,246 1,549 697

p - provisional data

Non-residents' direct investment in Romaniae posted a negative net value of EUR 338 million (compared with a positive net value of EUR 2,059 million in January – May 2019), of which equity (including estimated net reinvestment of earnings) amounted to a negative net value of EUR 72 million and intercompany lending recorded a negative net value of EUR 266 million.

In January - May 2020, total external debt increased by EUR 5,023 million, of which:

  • long-term external debt at end-May 2020 stood at EUR 77,630 million (70 percent of total external debt), up 5.4 percent against end-2019;
  • short-term external debt at end-May 2020 amounted to EUR 33,266 million (30 percent of total external debt), up 3.2 percent from end-2019.

Romania’s external debt and external debt service (EUR million)
  External debt External debt service, Jan. - May 2020p
End-December 2019p End-May 2020p
I. Long-term external debt 73,646 77,630 5,945
I.1. Public debt 39,477 43,953 1,054
I.1.1. Direct public debt* 39,192 43,689 1,030
I.1.2. Publicly guaranteed debt 285 264 24
I.2. Non-publicly guaranteed debt,
   of which: 		32,953 32,463 4,888
1.2.1. Long-term deposits of non-residents 749 324 280
I.3. Debt of the monetary authority,
   of which: 		1,216 1,214 3
I.3.1. Allocation of SDRs 1,216 1,214 3
II. Short-term external debt 32,227 33,266e 21,045e
Total external debt (I+II) 105,873 110,896 26,990

e - estimates
p - provisional data
*) The increase in direct public debt coming from the Eurobonds issued by the Ministry of Public Finance with a face value of EUR 6,300 million and from net borrowings of EUR 562 million was limited by revaluations due to price changes of the securities issued by the general government, worth around EUR -1,913 million.

Long-term external debt service ratio ran at 18.8 percent in January – May 2020 against 18.6 percent in 2019. At end-May 2020, goods and services import cover stood at 5.8 months, as compared to 4.6 months at end-2019.

At end-May 2020, the ratio of the National Bank of Romania’s foreign exchange reserves to short-term external debt by remaining maturity came in at 79.3 percent, against 73.8 percent at end-2019.

Methodological Notes

  1. Data are updated on a monthly basis. Data for the current period together with the revised data for the base period are available under Data sets; historical monthly and quarterly data back to 2005 are available in the Interactive database.
  2. Data from the NBR’s statistical surveys on International Trade in Services and Foreign Direct Investment may be affected by the impact of the pandemic, which, in statistical terms, consisted in the reduction of the reporting samples and the ensuing expansion of internal estimations. Accordingly, a greater magnitude of subsequent data revisions should not be ruled out.
  3. The international standard framework for statistics on the transactions and positions between an economy and the rest of the world lays down in the sixth edition of the IMF’s Balance of Payments and International Investment Position Manual (BPM6). The BPM6 methodology has been transposed into the EU legislation based on Commission Regulation (EU) No 555/2012 on Community statistics concerning balance of payments, international trade in services and foreign direct investment, as regards the update of data requirements and definitions.
  4. In order to analyse current account data, the following aspects should be considered:
    1. 4.1. Goods (on a BOP basis): Source: National Institute of Statistics (NIS) – International Trade of Goods. Imports FOB are calculated by the NBR based on the CIF/FOB conversion factor set by the NIS: http://www.insse.ro/cms/files/statistici/Importuri_CIF_FOB/coeficient_CIF_FOB.pdf. The balance of payments principle consists in entering goods based on the “change in economic ownership” criterion (goods acquired by residents are included, irrespective of whether the goods cross the country border or not), while in international trade statistics goods are recorded based on the “cross-border” criterion (goods are recorded when crossing the border, irrespective of whether they belong to residents or not). In order to ensure compliance with the “change in economic ownership” principle, the NIS data are adjusted by the NBR, so that the values of exports and imports of goods in the BOP statistics are different from those in international trade statistics. The main difference between the two types of statistics comes from manufacturing services on physical inputs owned by others which, according to BPM6, has been reclassified from Goods to Services and the data source has been changed from International Trade in Goods to the Quarterly Survey on international trade in services conducted by the NBR;
    2. 4.2. Services: Source: Quarterly Survey on International Trade in Services;
    3. 4.3. Primary income: includes compensation of employees, investment income (direct investment, portfolio investment, other investment) and other primary income (taxes, subsidies);
    4. 4.4. Secondary income: includes current private transfers and transfers of the general government.
  5. Foreign direct investment: The permanent debt between affiliated financial intermediaries (banks, NBFIs) is not treated as direct investment, but recorded under financial account/other investment.
  6. External debt includes the following debt financial instruments: currency and deposits, loans, debt securities, trade credit and advances, liabilities from insurance, pension, and standardised guarantee schemes, SDR allocation and other liabilities (according to IMF External Debt Statistics Guide for Compilers and Users, 2014).
  7. External direct public debt includes external loans taken directly by the Ministry of Public Finance and local governments in compliance with the legislation on public debt, including the government bonds acquired by non-residents – calculated at market value. The value of holdings by non-residents is estimated as a difference between the total value of bonds issued by the General Government and the total value of holdings by residents reported by the main financial intermediaries on their behalf and on behalf of their clients, according to NBR Regulation No. 4/2014, as subsequently amended and supplemented.
  8. External publicly guaranteed debt includes external loans guaranteed by the Ministry of Public Finance and local governments in compliance with the legislation on public debt.
  9. Long-term external debt service ratio is calculated as a ratio of long-term external debt service to exports of goods and services.
  10. Import cover is calculated as a ratio of the international reserves (foreign exchange + gold) at the end of period to average monthly imports of goods and services for the period under review.
  11. Short-term external debt by remaining maturity refers to the short-term external debt outstanding at the end of period plus the payments related to long-term external debt due in the following 12 months.
  12. Statistical data for the period 2013 – September 2019 have been updated according to the framework for the 2019 benchmark revision. Starting with October 2019, the data are compiled in the same methodological framework. More details can be found at: Process of statistical data revision.

The next monthly press release on the “Balance of payments and external debt” will be issued on 13 August 2020.

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