Romania’s public debt hits 38.7% of GDP under ESA, up 2.6pps y/y at end-Oct

By bne IntelliNews February 10, 2014

Romania’s public debt increased by 14.2% y/y, or by RON 30.1bn [EUR 6.8bn*], to RON 242bn [EUR 54.4bn] at the end of October 2013, the finance ministry reported under the ESA methodology.

The debt-to-GDP ratio rose by 2.6pps on the year to 38.7% of GDP at the end of October. Since the end of 2008 – when the state started borrowing massively to offset the drop in budget revenues, the public debt increased by RON 173bn [EUR 38.9bn at current exchange rate]. The debt-to-GDP ratio tripled, or increased by more than 25pps, to 37.8% of GDP.

The country’s public indebtedness however increased at slower rates recently as it pursued robust fiscal consolidation. The government expects 39.4% debt-to-GDP ratio for the end of last year.

Notably, the government shifted from domestic borrowing to Eurobonds. Thus, the public external debt increased from 16.4% of GDP to 38.7% over the past 12 months ending October. The shift continued with the USD 2bn Eurobond placed in January 2014. 

At the same time, the stock of domestic debt shrank from 17.4% of GDP to 16.8% of GDP. Weaker domestic borrowing was also an effect of the Treasury’s drive toward longer maturities in an attempt to diminish the refinancing risk. The share of short-term debt in the total stock of government securities dropped to 36% at end-Oct from 46% at the end of 2012, while the share of long-term debt [over five years residual maturity] more than tripled to 12.36% from 3.46% over the same period of time.

Under the national methodology – which adds the borrowing from the Treasury’s reserves on the top of ESA debt, the public debt increased by 11.4% y/y to RON 266.2bn [EUR 59.9bn] at the end of October. The debt to GDP ratio increased by only 1.9pps to 42.6% of GDP.

* at end of period’s exchange rate

ESA Public Debt GDP total total external internal nat accounting
  EUR bn EUR mn % of GDP % of GDP % of GDP % of GDP
2008      139.6         17,306 13.4% 8.0% 5.4% 21.3%
2009      117.5         27,971 23.6% 11.4% 12.1% 29.6%
2010      122.0         37,277 30.5% 14.9% 15.6% 37.1%
2011      131.4         42,916 33.3% 16.4% 16.9% 39.2%
Oct-12      131.8         48,991 36.1% 17.4% 17.4% 40.7%
2012      131.8         50,175 37.9% 19.3% 18.6% 41.0%
Oct-13      140.5         54,439 38.7% 21.9% 16.8% 42.6%
Source: MinFin

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