Romania Ctrl Bank: Investors Get Agitated If Public Debt Tops 40% Of GDP

Romania must keep its foreign currency reserves at sufficiently high levels, because investors get “agitated” every time the public debt exceeds 40% of a country’s gross domestic product, central bank governor Mugur Isarescu said Wednesday.

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"Some countries in Latin America defaulted even if their public debt was at 20% of GDP. The specialists' consensus puts the limit of the public debt at 60% of GDP, but in many cases, Romania included, the markets become more agitated when the debt reaches 40% of GDP," Isarescu told a banking forum.

This is why the central bank's forex reserve cannot be classified as excessive, he added.

End October, the central bank reported hard currency reserves of EUR32.3 billion, slightly down on the month.

Romania's overall international reserves, which include gold holdings, were at EUR35.5 billion in October.

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