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Balance of payments and external debt – July 2020

14.09.2020

In January - July 2020p, the balance-of-payments current account posted a deficit of EUR 4,863 million, compared with EUR 6,083 million in the same year-ago period. The deficit on trade in goods widened by EUR 635 million, the surplus on services increased by EUR 370 million, the primary income balance saw its deficit narrowing by EUR 945 million, and the surplus of the secondary income balance rose by EUR 495 million.

Balance of payments current account (EUR million)
  January - July 2019p January - July 2020p
CREDIT DEBIT BALANCE CREDIT DEBIT BALANCE
CURRENT ACCOUNT (A+B+C) 59,170 65,208 -6,038 51,643 56,506 -4,863
A. Goods and services 52,241 56,918 -4,677 44,869 49,811 -4,942
a. Goods 37,195 46,654 -9,459 31,541 41,635 -10,094
b. Services 15,046 10,264 4,782 13,328 8,176 5,152
- manufacturing services on physical inputs owned by others 1,764 97 1,667 1,439 85 1,354
- transport 4,594 2,028 2,566 3,722 1,521 2,201
- tourism-travel 1,594 2,932 -1,338 714 1,664 -950
- other 7,094 5,207 1,887 7,453 4,906 2,547
B. Primary income 3,991 5,727 -1,736 3,845 4,636 -791
C. Secondary income 2,938 2,563 375 2,929 2,059 870

p - provisional data

Non-residents' direct investment in Romaniae totalled EUR 1,326 million (compared with EUR 3,335 million in January – July 2019), of which equity (including estimated net reinvestment of earnings) registered a net value of EUR 779 million and intercompany lending recorded a net value of EUR 547 million.

In January - July 2020, total external debt increased by EUR 9,616 million, of which:

  • long-term external debt at end-July 2020 stood at EUR 82,499 million (71.4 percent of total external debt), up 12 percent against end-2019;
  • short-term external debt at end-July 2020 amounted to EUR 32,990 million (28.6 percent of total external debt), up 2.4 percent from end-2019.

Romania’s external debt and external debt service
  External debt External debt service, 7M 2020p
End-2019p End-July 2020p
I. Long-term external debt 73,646 82,499 7,890
I.1. Public debt 39,477 48,888 1,350
I.1.1. Direct public debt 39,192 48,643 1,313
I.1.2. Publicly guaranteed debt 285 245 37
I.2. Non-publicly guaranteed debt,
   of which: 		32,953 32,436 6,537
1.2.1. Long-term deposits of non-residents 749 200 413
I.3. Debt of the monetary authority,
   of which: 		1,216 1,175 3
I.3.1. Allocation of SDRs 1,216 1,175 3
II. Short-term external debt 32,227 32,990e 34,762e
Total external debt (I+II) 105,873 115,489 42,652

e - estimates
p - provisional data
*) The increase in direct public debt came from the bonds issued by the Ministry of Public Finance with a face value of EUR 6,300 million and USD 3,300 million (equivalent to EUR 2,785 million) respectively, as well as from net borrowings of EUR 648 million was limited by revaluations due to price changes of the securities issued by the general government, worth around EUR -323 million.

Long-term external debt service ratio ran at 17.6 percent in January – July 2020 against 18.6 percent in 2019. At end-July 2020, goods and services import cover stood at 5.9 months, as compared to 4.6 months at end-2019.

At end-July 2020, the ratio of the National Bank of Romania’s foreign exchange reserves to short-term external debt by remaining maturity came in at 81.4 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 14 October 2020.

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