Romania has to borrow some RON 86.9 billion (EUR 18.1 bln) this year to finance its 3.6% of GDP budget deficit and refinance the debt due during the period, the Finance Ministry announced, Ziarul Financiar reported.

The volume represents about 7.7% of the year’s projected GDP. For comparison, the latest estimates for the average public financing requirement in the euro area, published as of November 2019 for the last year, was 14.1% while the average public debt was 86.4% of GDP (more than double Romania’s debt-to-GDP ratio) and the public deficit was 0.5% of GDP on average.

The Romanian Finance Ministry announced the debt volume to be refinanced this year amounts of RON 46.3 bln (EUR 9.7 bln) while the public deficit to be financed would amount to RON 40.6 bln (EUR 8.5 bln).

From the total estimated amount, the ministry wants to attract about EUR 6 bln (RON 28.8 bln) from foreign financial markets by issuing Eurobonds, early repurchase operations and partial exchange of existing Eurobonds series, private placements, as well as by borrowing from international financial institutions.

The budget deficit will be financed in proportion of 55% from the internal market and 45% from the external market respectively.

Through the external loans, the Ministry of Public Finance intends to reduce the risk of refinancing by extending the remaining average duration of the portfolio of government securities, at favorable cost conditions, diversifying the investment base, as well as maintaining and consolidating the financial reserve in the existing currency at the disposal of the State Treasury.

On the domestic market, the ministry intends to issue a volume of government securities of about RON 55 - 57 bln (RON 57 bln in 2019), with a majority structure in the medium and long term.

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editor@romania-insider.com