AN EMPIRICAL STUDY ON PUBLIC DEBIT IN ROMANIA

Abstract

This paper states that public debt can be defined as an amount that a country owes to creditors outside themselves, but also to individuals, businesses and even other governments. The term "public debt" is used interchangeably with the term sovereign debt. The study presents a brief analysis of the evolution of public debt in Romania for the past years. The issue of public debt sustainability is an important factorin the development of policies aimed at reducing the volatility of volatile capital markets, the economic policy of Romania should be focused on the gross GDP growth. Public debt is sustainable when state authorities have the ability to repay public debt service to creditors without having to make future adjustments to budget revenues and expenditures. The public debt has a negative effect on economic growth, heavily indebted countries being exposed to the risk of capital outflows or of the rapidly deteriorating position of public finances in the context of an economic and financial crisis. Emerging economies cannot sustain the same debt level as a share of GDP, that countries with advanced economies can manage, but a much lower one, mainly because of the limited access to capital markets of the countries from the former category

Keywords

• public debt
• budget deficit
• public debt sustainability
• economic growth
• external debt