Page 57 - bne IntelliNews Southeastern Europe Outlook 2025

Romania’s FDI landscape highlights a shift towards parent-company financing as the primary driver of growth, compensating for declining equity contributions and reinvested earnings. While the modest overall growth signals continued foreign investor interest, the reduced reinvestment levels may indicate caution about long-term expansion in the Romanian market.
Romania’s gross external debt (GED) surged by €23.9bn in the 12 months to October 2024, reaching €186.3bn, according to the National Bank of Romania (BNR). It accounts for 84% of the period’s CA deficit and the sharp rise in the country’s GED is a direct consequence of the wide CA gap (and, indirectly but to a large extent, wide public deficit)
The rise in GED pushed the country’s debt-to-GDP ratio to 53.7%, up from 52.2% one year earlier.
The public administration sector accounted for the majority of the increase, with its external debt rising €19.4bn over the year, marking a sharp 27% y/y rise to €91.4bn.
Debt attributed to foreign direct investment (FDI) companies also grew significantly, increasing by 10% y/y to €49.1bn.
In contrast, the rest of the economy, excluding FDI companies and banks, saw its external debt contract by 2% y/y to €29.4bn, highlighting subdued external borrowing by the private sector.
Romania’s external debt profile reveals an increasing dependency on public-sector borrowing to fund economic needs, with public administration debt now accounting for nearly half of the total gross external debt. The rise in FDI companies’ external debt also reflects ongoing financing needs for foreign-backed entities operating in the country.
57 SE Outlook 2025 www.intellinews.com