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Balance of payments financing in Romania. The role of remittances
Daianu, Daniel and Voinea, Liviu and Tolici, Mugur |
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| The main goal of this paper is to illustrate and analyze the sources of financing the balance of payment deficits in Romania. Within this context, it is provided - for the first time, at the best of our knowledge - an assessment on the rising role and significance of foreign remittances in the Romanian economy; an attempt is also made to understand what lies behind the high level of errors and omissions. The first section of the paper looks at the balance of payment dynamics in Romania over the last decade. Additional focus is placed on the balance of payment evolution in section two, which is devoted in part to the remarkable adjustment that occurred in 1999. Section two also tests the hypothesis of potential correlation between the budget and the current account deficits. Section three tackles the sensitive issue of financing the balance of payment deficits, emphasizing two items: foreign remittances, respectively errors and omissions. The paper ends with a section on comprising conclusions. The limits of the research come mainly from the fact that data are either too scarce and unreliable, or too aggregated. For example, the number of Romanian, legal and illegal, migrants that work abroad for less than one year is only an estimate. Furthermore, the way The National Bank of Romania collects statistical information makes no distinction between different types of current private transfers (cash remittances, gifts, inheritances, etc.), while in-kind remittances are entirely not accounted for. In addition, by the very nature of the subject, the analysis on errors and omissions can provide explanations, and can interpret their overall impact, but it can not accurately rank the relevance of each of those explanations - otherwise, precise figures would have replaced those errors and omissions. |
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