Foreign investors fear the public debt of Eastern Europe countries

• The exchange rate was not influenced by the presidential elections

Returns of Eastern European stock and currency markets have reached 50% this year, but the high level of public of the countries in the region could make them lose favor with investors, according to Bloomberg. "Some investors could underestimate the potential pressure this could exert on government bonds and on the local currencies", said Tim Haaf, analyst with Pacific Investment Management Co., a division of the Allianz SE group.

Nicolae Alexandru Chidesciuc, head-economist at ING Bank, has a different opinion: "A high level of public debt would not necessarily represent an impediment in attracting foreign investors, what they are interested in are a healthy economy, and sound fiscal and monetary policies. In the case of Romania, its public debt is 30% of the GDP, and it is rising, but we are below the maximum level imposed by the EU, of 60%".

The rise of public deficits forced some EU countries, such as Poland and Latvia, to postpone their switching to the Euro.

Romania and Hungary were forced to implement budget cuts that worsened their recessions, in order to meet the criteria required to qualify the foreign loans of EUR 20 billion, (around EUR 30 billion,), needed to finance the budget and current account deficits, according to Bloomberg, quoted by NewsIn.

Even though their economies saw sizeable growth recently, Eastern European countries currently rely on foreign loans of around USD 1 billion, the equivalent of 69% of the global total, from sources led by the International Monetary Fund and World Bank.

Rachel Ziemba, analyst with Roubini Global Economics said that Eastern Europe is "lagging and will continue to lag behind the rest of the emerging markets".