Romania’s public debt increased by another RON 14 billion (EUR 2.8 billion) in August after the RON 30 billion leap in July, to reach RON 1.084 trillion (EUR 213.8 billion) at the end of the month, according to data published by the Finance Ministry. 

After the Treasury raised nearly EUR 5 billion with FX bonds in July, it relied on private placements in August – when it raised EUR 1.5 billion in two operations.

Romania’s debt-to-GDP ratio reached 59.7% of GDP at the end of August from 58.9% a month earlier, according to the Finance Ministry’s estimates. Both figures are subject to downward revision after the Q3 GDP data is released. However, given the first budget revision that puts the deficit at 8.4% of GDP, the odds for the ratio to exceed 60% by the end of the year are significantly increasing. 

The European Commission expects Romania’s indebtedness measured by the debt-to-GDP ratio to remain below 60% at the end of 2025 (59.1%) and to increase by only 2 percentage points to 61.1% at the end of 2026. Further fiscal consolidation will slow down the advance in the coming years. 

Romania’s public debt increased by RON 120 billion (EUR 23.7 billion), but part of this (RON 19 billion or EUR 3.7 billion – roughly 1% of GDP) was the effect of the local currency’s 1.8% weakening versus the euro in May amid political uncertainty.

The currency structure of Romania’s public debt changed as a result of both local currency weakening and the government’s reliance on foreign borrowing. Thus, the share of domestic denominated public debt decreased from 48.5% at the end of 2024 to 46.7% at the end of June and 45.7% at the end of August. 

Nominally, the stock of local currency debt rose by only 5.9% y/y compared to the 18.7% y/y surge in the stock of foreign currency-denominated debt (which includes the exchange rate effects). 

On the upside, the short-term public debt decreased by 21.4% y/y to RON 63.1 billion (EUR 12.4 billion) or only 5.8% of total public debt, compared to 8.3% at the end of 2024.

iulian@romania-insider.com

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