FISCAL AND DEBT SUSTAINABILITY AND GROWTH CHALLENGES

Abstract

Although there is a long period since the problem of public debt sustainability captures the attention of economists, today continues to be no unanimity concerning an adequate unique sustainability indicator or function generally accepted. Moreover, during the actual period of global crisis and reforming at the EU level of fiscal policy, the debt sustainability has become an extremely important issue. In this line of elaborating new models and improving methodologies in order to quantify the impact of various factors on public debt sustainability is our study. During its period of pre- and post-accession into EU, and moreover in actual crisis time, Romanian economy is facing to a number of dificile problems. Among these, the public debt sustainability plays a central role, its implications being practically expanded on all fields connected to the economic dynamics. This study is analyzing past and current situation as well as potential factors affecting fiscal and public debt sustainability over next period. A descriptive analysis of the main fiscal challenges for the the next period is made, focusing in particular on future budgetary pressures of sufficient magnitude to affect fiscal sustainability (e.g. pensions). The forecast takes into account: current fiscal policies as set out in the Fiscal Strategy, projections from international organizations, certain assumptions and own estimations, etc.public debt, sustainability function, contour plot, primary deficit, interest rate