Key Points:
Romania's international reserves as a percentage of GDP are the lowest in the EU.
This has raised concerns among economists about the country's ability to withstand financial shocks.
The reserves have been declining in recent years due to factors such as a widening trade deficit and a decrease in foreign investment.
Economists have called for the government to take steps to increase reserves, such as reducing the budget deficit and attracting more foreign investment.
Additional Details:
Romania's international reserves stood at €69.7 billion at the end of April 2024.
This is equivalent to 20.4% of GDP, the lowest level in the EU.
Hungary is the second-lowest country, with a reserves-to-GDP ratio of 21.1%.
The Czech Republic has the highest ratio, at 43.9%.
Economists say that a reserves-to-GDP ratio of at least 30% is considered safe.
Romania's low reserves make it vulnerable to sudden changes in capital flows.
For example, if foreign investors suddenly withdraw their money from Romania, the country could be forced to devalue its currency.
This could lead to higher inflation and lower economic growth.
The government has said that it is taking steps to increase reserves, but economists say that more needs to be done.
Overall, Romania's low reserves are a cause for concern. The government needs to take action to increase reserves and reduce the country's vulnerability to financial shocks.
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