VOLATILITY OF INTERNATIONAL FINANCIAL MARKETS AND PUBLIC DEBT SUSTAINABILITY

Under the circumstances of markets volatility persistence, the global financial balances deteriorated during the post-crisis period. In the case of advanced countries, the bailout of the private banking system by public or multilateral financial intervention, instead of leading to financial rebalancing has transferred a systemic risk to the sovereign level. Bringing high public debts back to sustainable levels by budgetary constraints of austerity programs has proved to hamper the economic growth that increased, in fact, the risk of sovereign default. Romania witnessed an excessive rise in the public indebtedness during 2007-2013 to unsustainable levels, which needs to be addressed by improving the public debt management and achieving surpluses in the primary balance.