Dependence Of Country Risk Compared to the Foreign Debt Level

PhD Professor Angelica Băcescu-Cărbunaru
PhD Lecturer Monica Condruz-Băcescu
Academy of Economic Studies

Abstract

 The article presents some of the fundamental aspects of country risk’ dependence compared to foreign debt level. Starting from external debt burden we analyze the usage of foreign loans, foreign debt bearing capacity as well as the availability of data regarding the external debt. Country risk represents the exposure to losses which may occur in a business with a foreign partner, caused by specific events that are, at least partially, controlled by the partner country’ government. Macroeconomic analysis of economic and financial component of country risk involves how this risk is influenced by government policy, by the economic role of government, by pricing strategies, investment priorities, financial structures, macroeconomic policy, by the ability to obtain foreign funds, the level of external debt as well as the liquidity and cash flows in that country.

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Romanian Statistical Review 10/2012