Romania’s public debt-to-GDP ratio at end-March revised to under 50%

Romania’s public debt to GDP ratio reached 49.2% at the end of April, from a revised 48.4% level at the end of March and 48.8% at the end of 2021, according to the data publishedby the Ministry of Finance.

In absolute terms, Romania’s public debt reached RON 602.9 bln (EUR 121.8 bln) at the end of April, RON 8.9 bln (EUR 1.8 bln) more than it was at the end of March.

The Ministry of Finance initially reported a public debt to GDP ratio of 50.2% for the end of March, based on the GDP in the 12 months to the end of December.

But it revised the ratio downward to 48.4% after the GDP for the first quarter of the year (Q1) was released, and the GDP in the latest available four-quarter period - ending at the end of March - became significantly higher. Romania’s GDP rose by a real 6.5% YoY in Q1, significantly exceeding expectations.

As the indebtedness was revised below 50% of GDP, the Government is no longer subject to the provisions of the law of fiscal responsibility, which stipulates that upon reaching such a threshold the Executive should come up with a program to reduce its indebtedness and that the program should include, among others, measures to freeze debt.

The authorities stated at the time the unrevised indebtedness at the end of March was reported above 50%, that they did not agree with restrictive measures, such as a wage freeze, but would rather tackle the situation by investments and economic growth.

(Photo: Kittichai Boonpong/ Dreamstime)