Field: Finances and financial capital

Subfield: Finances

Details:

In most countries of the world (especially the developed ones), public debt has increased significantly in the last decades. This has happened against the background of significant public deficits accumulated in time. When the state borrows money for its deficit, it competes against private economic agents, putting significant pressure on the cost of financing (the interest). Excessive public debt reflects the government’s incapacity to keep in check public expenditures and strictly limits government to its capacity to collect taxes or contributors’ capacity to pay them. An increasing public debt also shows difficulty in solving the structural problems that generate public expenditures, that are difficult to cover from public revenues. Romania’s public debt has increased constantly, reaching over 72.9 billion dollars in 2017. Although this is the lowest public debt (% of GDP) in the region and the EU, public debt volume increased significantly during and in the aftermath of the crisis, without resulting in important public investment.