Romania to issue FX bonds twice by yearend, amid sizeable fiscal slippage

Romania will tap the market with FX bonds twice by the end of the year, at the end of August (or beginning of September), and in November, announced the minister of Finance, Marcel Boloș, in an interview for Profit.

The budget deficit topped 4% of GDP in January-July, up from 3.6% in January-June, he said.

Romania initially targeted a 5%-of-GDP public deficit for 2024.

Minister Boloș did not explicitly state that the government has given up the 5%-of-GDP deficit target, which would also require a budget revision, but his comments point to a new target in line with the European Commission's Spring Forecast estimate of 6.9% of GDP [ESA terms] for the year 2024.

Independent analysts expect to see the public deficit significantly wider this year, though.

The new deficit target leads to higher gross financing requirements, seen by minister Boloș at RON35bn (7bn or 2% of GDP) above the target initially planned. Part of it would be completed through the two FX bonds planned by the end of the year.

"We have a RON181bn gross financing requirement for this year, out of which we have already achieved RON158bn so far. As the budget deficit increases, it is natural to update the gross financing requirement. If we use the European Commission's estimate [6.9% of GDP], we have to lift the gross financing target to RON215bn in the first stage," the minister said.

(Photo: Sabin Cirstovean/ Inquam Photos)