It is up to policy-makers to draft policy measures during such an episode in order to influence both the level where a U-turn occurs and the slopes following the end of an episode of sizeable capital inflows. I will show in the following section that the policies envisaged by the arrangement Romania signed with the EU and the IMF are aimed at smoothing out the slope of the trends of the abovementioned indicators so that the necessary adjustments unwind at a reasonable pace, without destabilising the economy. BIS Review 5/2010  5  3. Case study – Romania  3.1. The period of massive capital inflows  Foreign capital inflows in Romania have picked up since 2004. The current account deficit widened from 8.4 percent of GDP in 2004 to 13.5 percent of GDP in 2007 and to 12.3 percent of GDP in 2008. The medium- and long-term external debt of the private sector posted an almost twofold increase (Chart 1), from 12.9 percent of GDP in 2004 to 25.6 percent of GDP in 2008.
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