Public debt, Photo: Pichet Wissawapipat / Panthermedia / Profimedia
Romania ended 2024 with a significant deterioration in its external position, according to the Annual Report of the National Bank of Romania on the balance of payments, published on Tuesday. The current account deficit rose to 28.9 billion euros, equivalent to 8.2% of GDP, compared to 6.7% in the previous year.
The level is among the highest in the European Union and signals a structural problem: the Romanian economy systematically consumes more than it produces for foreign markets.
What does this deficit actually measure?
The current account reflects a country's economic relationship with the rest of the world: trade, services, income and transfers. A large and persistent deficit indicates that an economy relies on external financing to function.
In 2024, this dependence has intensified.
Where does the damage come from?
The NBR report identifies three main sources:
1. Imports continued to advance, while exports stagnated. The deficit in the balance of goods reached almost 33 billion euros, reflecting the weak competitiveness of domestic production and high domestic demand.
2. Services – one of Romania's few external strengths – brought a smaller surplus than in the previous yearespecially against the backdrop of falling revenues from transport and business services.
3. Transfers from European funds were reduced. The inflows of current European funds decreased, diminishing an important source of balancing the current account.
A key element of the NBR's analysis is that the external deficit did not increase as a result of an investment boom, but as an effect of the reduction in national saving, especially in the public sector.
In 2024, consumption grew faster than income, saving fell, and the difference was reflected directly in higher imports and a deeper external deficit.
The data clearly show that the public sector is the main contributor to this deterioration, while the private sector has remained relatively balanced externally.
How to finance this imbalance
The current account deficit was covered by capital inflows. The financial account recorded positive net flows of almost €20 billion, from direct investment, portfolio investment (especially government securities) and other financial flows, including loans.
Romania does not, therefore, have an immediate financing problem. But the structure of financing is becoming more and more important: the share of borrowed capital and debt is increasing, at the expense of long-term productive investments.
In the short term, the situation is manageable. In the medium term, however, the cost of financing increases, the ability to cope with shocks decreases, and inevitable adjustments in spending occur.
At the macroeconomic level, Romania is in a similar situation: the standard of living is partly supported by external resources, which exposes the economy to risks when financing conditions tighten.
Why this matters for the economy
A high and persistent external deficit means: potential pressures on the exchange rate, higher financing costs for the state, increased vulnerability to external shocks and less room for expansionary fiscal policies.
In short, the BNR data do not indicate an imminent crisis, but they send a clear message: the current economic growth model, based on consumption and imports, generates growing external imbalances.
