Service of Romania’s short-term external debt surges by 68% in Jan-May

Romania’s external debt increased to nearly EUR 127 bln at the end of May, marginally up from EUR 126 bln at the end of 2020 and more substantially (+EUR 16 bln) from EUR 111 bln at the end of May 2020, the National Bank of Romania (BNR) announced.

The driver of the increase both in 2020 and in 2021 was the public external debt - generated by the Eurobonds.

The medium and long-term public external debt increased from EUR 44 bln at the end of May 2020 - when the Government hadn’t started borrowing massively yet - to EUR 57.5 bln at the end of 2020 after the Government piled up most of the funds needed to finance last year’s public deficit above EUR 20 bln, and EUR 57.8 bln at the end of May.

Net public borrowing in Jan-May was thus marginal, despite the EUR 3.5 bln Eurobonds issued. A new EUR 3.5 bln Eurobond issued in July will predictably further push up the public external debt.

A striking development takes place in the short-term debt area where, although the stock of debt remains more or less constant, the service has surged by 68% YoY to EUR 35.3 bln.

The stock of short-term external debt increased moderately to under EUR 35 bln at the end of May from EUR 33 bln one year earlier.

The debt service for the short-term debt is closely correlated with the average maturity of the debt, and the 68% advance indicates significantly shorter maturities for the stock of external debt this year.

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