Romania’s borrowing cost is double compared to euro area countries

The interest expenditures generated by Romania's public debt will rise by 13% to EUR 3.1 billion this year and by another 26% to EUR 3.9 bln in 2021, according to a forecast of the European Commission.

The increase in interest expenses for Romania is among the highest in the EU, Profit.ro reported. The drivers are Romania's still high borrowing costs compared to the euro area and the rapidly rising public debt due to wide public deficits.

The interest paid by Romania for its public debt this year accounts for some 1.5% of GDP - a ratio that is very close to that seen in the euro area.

However, Romania's public debt to GDP ratio is just over half that in the euro area: it will reach some 46.5% at the end of the year (up from 39.2% at the end of 2019), compared to an 85% debt to GDP ratio in the euro area. This reflects the high, roughly double, cost paid by Romania for its public debt compared to the euro area: some 3.7% (an average for the local and foreign currency debt) versus 1.85% in the euro area.

(Photo source: Pexels.com)