BNR official warns Romania must address public debt refinancing alongside deficit

Romania must focus on refinancing its public debt as well as reducing its budget deficit, as debt repayments are putting pressure on the country’s international reserves, Cristian Popa, a member of the Board of Directors of the National Bank of Romania (BNR), said on November 2, according to Agerpres.

Popa said Romania faced a budget deficit of approximately 6% of GDP while also needing to refinance public debt equivalent to about 7% of GDP maturing this year.

Romania no longer has a small public debt; it needs to be continuously refinanced.

“Romania no longer has a small public debt; it needs to be continuously refinanced,” he said.

The central bank official highlighted the impact of government financing operations on the BNR’s international reserves, citing a payment of EUR 2.7bn made on behalf of the Ministry of Finance in September. Of that amount, EUR 2.5bn was used for debt refinancing, contributing to a significant reduction in international reserves at the end of the month.

Popa said Romania needed to address its financing requirements and maintain investor confidence as it continued efforts to meet its fiscal targets and preserve its investment-grade rating.

“It's no joke, we need to discuss more, not just about the deficit, but also about public debt [...] in front of the investors. I personally meet with many [investors]; it's hard, it's becoming increasingly difficult to convince them, to be credible, to keep their trust. The battle for convincing the rating agencies is not over yet,” he said.

The official added that Romania needed to continue meeting its commitments despite the rating agencies’ decision to maintain the country’s investment-grade status.

“That is an achievement, the fact that the rating agencies affirmed Romania’s investment-grade rating, but the challenges remain high and are not only related to the deficit,” Popa said.

His remarks came as Romania continued to manage its financing needs through domestic borrowing and international debt issuance, while seeking to bring its budget deficit under control.