Romania’s public debt eases in June to 48.4% of GDP

Romania’s public debt decreased by RON 6.25 billion in June to RON 724 billion (EUR 146 billion) at the end of the month, the Ministry of Finance announced. The debt-to-GDP ratio eased to 48.4% at the end of June from 48.8% at the end of May.

By currency, the decrease was driven by the local currency-denominated debt (RON 337 billion or 47.5% of total public debt) that dropped by RON 5.16 billion, meaning that the bills and bonds maturing in June were not fully rolled over. The USD-denominated debt also decreased by the equivalent of RON 1.33 billion.

Compared to the end of 2022, Romania’s public debt increased by the equivalent of RON 58.1 billion (EUR 11.7 billion, or the equivalent of 3.9% of GDP), mainly due to sharp increases in January, February (when Eurobbonds were issued) and May.

The indebtedness increased, however, by only 1.1pp from 47.3% at the end of 2022 to 48.4% at the end of June – an advance that was moderated by the effects of sharp nominal GDP advance (high GDP deflator): the 12-month rolling GDP advanced by 6.3% from December to June.

Looking further, the public financing needs have increased compared to the initial plans as the budget deficit heads towards 6.8% of GDP or 2.4% of GDP above the initial target. The Government hopes to somehow keep the deficit at 5.5% of GDP, which would moderate the unplanned financing needs, which remain significant. On the other hand, the nominal GDP keeps rising fast with positive effects on the indebtedness ratio.

(Photo source: Ungureanu Vadim/Dreamstime.com)