Romania borrows 6%-7% of GDP in 2022 but ends with lower indebtedness

The public debt of Romania’s Government increased by 15%-16% YoY or by nearly RON 90 bln (over EUR 18 bln) in absolute terms during 2022, to RON 667.3 bln (almost EUR 135 bln) at the end of the year, according to the Ministry of Finance.

The public debt thus increased in nominal terms by 6%-7% of GDP, depending on the base GDP (average or end-of-period) – which safely covered the public deficit that reached 5.7% of GDP.

The Ministry of Finance argues that part of the loans taken in 2022 is contracted under the Resilience Facility – which will ease the public debt cost over the coming years.

Despite the massive net public borrowing, the country’s indebtedness measured by the debt-to-GDP ratio dropped to 47.2% at the end of the year from 48.9% at the end of 2021, thanks to the high inflation.

The GDP expanded by nearly 20% in 2022 compared to 2021 in either local currency or euros. The largest part of the nominal expansion of Romania’s GDP was the effect of inflation, as in real terms, the country’s economy increased by only 4.8% YoY.

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