Balance of payments and external debt – May 2021

Balance of payments and external debt – May 2021

Long-term external debt at end-May 2021 totalled EUR 92,193 million, down 0.7 percent against end-2020

In January - May 2021p, the balance-of-payments current account posted a deficit of EUR 5,947 million, compared with EUR 3,207 million in the same year-ago period. The breakdown shows that the deficit on trade in goods widened by EUR 1,130 million, the surplus on secondary income and that on services decreased by EUR 287 million and EUR 72 million, respectively, while the surplus on primary income turned into a deficit.

Non-residents’ direct investmente in Romania totalled EUR 2,432 million (compared with EUR 758 million in January - May 2020), of which equity (including the estimated net reinvestment of earnings) and intercompany lending recorded net values of EUR 2,340 million and EUR 92 million, respectively.

In January - May 2021, total external debt increased by EUR 1,057 million, of which:

  • long-term external debt at end-May 2021 totalled EUR 92,193 million (72.6 percent of total external debt), down 0.7 percent against end-2020;
  • short-term external debt at end-May 2021 amounted to EUR 34,791 million (27.4 percent of total external debt), up 5.1 percent from end-2020.

Long-term external debt service ratio ran at 17.4 percent in January - May 2021 against 20.1 percent in 2020. At end-May 2021, goods and services import cover stood at 4.9 months, as compared to 5.6 months at end-2020.

At end-May 2021, the ratio of the National Bank of Romania’s foreign exchange reserves to short-term external debt by remaining maturity came in at 84.8 percent, against 90.7 percent at end-2020.

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 going 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 estimates.

3. The international methodological standard on balance of payments compilation is ensured by the IMF’s sixth edition of the 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:                                

4.1. Goods (on a BOP basis): Source: National Institute of Statistics – International Trade of Goods. Imports FOB are calculated by the NBR based on the CIF/FOB conversion factor set by the NIS.  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, therefore the values of exports and imports of goods in the BOP statistics are different from those in international trade in goods statistics;                                                                 

4.2. Services: Source:  Quarterly Survey on International Trade in Services;                                            

4.3. Primary income: includes compensation of employees, investment income (direct investment, portfolio investment, other investment) and other primary income (taxes, subsidies);

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 allocations and other liabilities (according to the IMF’s External Debt Statistics Guide for Compilers and Users, 2014).

7. External direct public debt includes external loans taken directly by the Ministry of Finance and local governments, in compliance with the legislation on public debt, including government securities purchased by non-residents – calculated at market value. The value of government securities purchased by non-residents is estimated as a difference between the total value of issues by general government and the total value of holdings of government securities by resident institutional sector reported by the main financial intermediaries on their behalf and on behalf of their clients for which they render custody services, 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 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 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.

The next monthly press release on the “Balance of payments and external debt” will be issued on 13 August 2021.