Romania’s public debt, as measured by the ESA methodology, increased by only RON 9 billion (EUR 1.8 billion) during March, reaching 56.1% of GDP at the end of the month, up from a revised 55.7% one month earlier and 54.8% at the end of 2024, according to data published by the Finance Ministry. The end-February indebtedness ratio was revised downward from 56.3% of GDP, in line with the updated four-quarter GDP after the release of the Q1 GDP.

Romania’s public debt thus rose during Q1 2025, particularly due to the FX bonds issued in January and February, by EUR 7 billion.

The share of public debt denominated in Romanian leu declined slightly to 46.3% at the end of March from 46.5% at the end of 2024. At the same time, debt denominated in euros increased from 40.5% to 41.1%, while debt in US dollars edged down from 10.2% to 10.1%.

The increase in public debt was mainly driven by Romania’s issuance of EUR 4 billion in foreign currency bonds in February. An additional EUR 2.75 billion was raised in March (partly to refinance maturing debt), bringing the total volume of FX bonds issued in the first quarter of 2025 to EUR 6.75 billion. This is more than half of the government’s EUR 13 billion external financing target for the year.

In Q2, the government paused further FX bond issuances due to heightened political uncertainty linked to the presidential election campaign. Despite this, retail bond sales continued at a robust pace until May, when retail investors also became more cautious. The Treasury also operated private placements.

Romania's public indebtedness increased by 5.9 pp in 2024 amid an 8.65% GDP public deficit (cash terms) and an annual growth of nearly 10% for the nominal GDP (despite sluggish 0.8% real economic growth). This year, the public deficit is expected to narrow, easing the pressure on public indebtedness. However, the lower GDP deflator this year would result in a slower advance of nominal GDP, hence a less visible (positive) impact on the country's indebtedness compared to last year. 

The European Commission, under its Spring Forecast on May 19, projected Romania's public debt at 59.4% of GDP at the end of 2025 to rise to 63.3% one year later. The forecast assumes 1.4% GDP growth and a 0.7 pp decline in the public deficit to 8.6% of GDP (ESA terms) in 2025 from 9.3% in 2024.

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iulian@romania-insider.com