Romania's public debt-to-GDP ratio rises to 48.9% at end-2021

Romania's Government public debt reached RON 576.6 bln (EUR 116.5 bln) at the end of 2021, the Ministry of Finance announced. The public debt-to-GDP ratio thus reached 48.9% at the end of last year, 1.5pp up from one year earlier.

The moderate rise of the public indebtedness, slower than expected, occurred amid a slight compression of the Treasury's buffers and above-expectation inflation (hence higher than projected nominal GDP).

The public debt increased by RON 76.7 bln during the year, accounting for EUR 15.5 bln at the exchange rate at the end of 2021. But the local currency has marginally weakened during 2021, and the increase of the public debt, including the exchange rate effects, was only 13.9 bln.

For comparison, in 2020 - when the public debt was 9.6% of GDP compared to only 6.7% in 2021 - the increase of the public debt was EUR 26.0 bln (or EUR 24.5 bln including the exchange rate effects).

Notably, the increase in the public debt by whatever measure (RON 76.7 bln, 6.5% of GDP) was smaller than the public deficit meaning that the Government's buffer has narrowed during the year. But this came after the buffer had strengthened significantly during 2020 when the Government had borrowed intensively.

Speaking of public borrowing, this seems increasingly difficult, and the Government reduced the gross borrowing target for March this year from RON 4.7 bln to RON 3.9 bln, according to Profit.ro.

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