Romania vulnerable to debt crisis in euro zone, World Bank says

Romania is one of the countries vulnerable to the debt crisis in the euro zone, as it financial system is connected to the ones in highly indebted European and since the Romanian economy has attracted investments from Greece, according to a World Bank report. “Countries that faced the crisis with unsustainable domestic booms - characterized by large current account deficits – Bulgaria, Latvia, Lithuania and those with vulnerable private or public balance sheets Hungary, Romania, are expected to recover more slowly, due to limited room for policy maneuver. Nonperforming loans are rising, and in some countries: Ukraine, Croatia, and Romania, bank provisioning is lagging more than 50 percent of the nonperforming loans,” writes the World Bank report. Because of significant presence of EU- 5 banks, international capital flows to Europe and Central Asia and to a lesser extent to Latin America and the Caribbean might be seriously affected in the event of a default or restructuring of high-income sovereign debt, according to the WB. Read the entire report here. (Adobe Reader required)