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Direct foreign investment type increases foreign deficit

The type of the direct foreign investments in Romania has increased the country's current account deficit by almost ten times over 2003-2007, with this deficit having stood at 14 percent of the Gross Domestic product late in 2007, financial analysts and experts in the field say.

'The current account deficit tripled in the latest three years because of the type of direct foreign investments currently operated on the domestic market,' economic analyst Liviu Voinea, who is also the manager of the Group for Applied Economics, on the occasion of a round table on Romania's current account deficit. In his turn, the economic analyst Ilie Serbanescu mentioned that only 2.3 billion dollars from the reserve of 30 billion dollars in direct foreign investments were greenfield. Serbanescu warned at the same time such investments haven't reach yet, although they are quickly to reach, the stage of profit repatriation, which is to affect even more the current account deficit, and the trade deficit too. Chief economist of the National Bank of Romania (BNR) Valentin Lazea said that the Romanian current account deficit is prompted both by the demand and by the offer. Nevertheless, it is first at all generated by the imbalances in the aggregate offer, which may be corrected through restructuring policies. In 2007, the foreign deficit surged by 60 percent, from 10.156 billion euros to 16.872 billion euros. According to Lazea, the level was so high also because of the fact that there existed the money - from direct foreign investments and loans from the banks too - to finance it. The money that entered the country, especially brought by the commercial banks, but not only, increases in 2007 up to 14.151 billion euros compared with 7.164 billion euros in 2006, according to Lazea. The BNR official showed that the direct foreign investments in the processing industry increased over 2003-2007 from 9 to 12 percent of the GDP, but with those in the real estate, financial brokerage and insurance sectors having surged from 4.5 to 15 percent of the GDP. In the same time, the direct foreign investments in the tourism and transportation sectors, which might contribute to the leveling of the balance of payments, continue to stay below 0.5 percent of the GDP. In fact, Romania is the single state in the region having recorded foreign deficit in the transportation and tourism sectors, Lazea warned. According to data presented by the BNR official, the products in the case of which the trade deficit grew more in 2007, were the foodstuffs and the cars. The BNR official also drawn attention on the non-sustainable growth rates in the non-governmental loan field, which in 2007 climbed to 60.4 percent, At the same time the loans in hard currency surged by 84 percent, with the loans to population having recorded an increase by 82 percent and the loans in hard currency for population and increase by 134 percent. Sursa: http://www.rompress.ro

Tags: foreign deficit billion which percent current investments direct account bnr

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