Romania’s public debt reaches 42.5% of GDP at end-2013

By bne IntelliNews April 22, 2014

Romania’s general government debt increased by 10.8% y/y to RON 267bn [EUR 59.5bn] at the end of 2013, the finance ministry announced under the local methodology calculations. The debt-to-GDP ratio inched up by 1.5pps to 42.5%.

At the end of 2008, before the recession period, the ratio stood at 21.3%.

Under the ESA methodology, which does not include the borrowing from own reserve funds, the country’s public debt was only RON 241.4bn [EUR 53.8bn], up 8.4% y/y. The debt-to-GDP ratio thus edged up by only 0.4pps to 38.4% at the end of the year - however, a considerable 25pps up against the 13.4%/GDP level at the end of 2008.

Sticking with the EU methodology, the government’s domestic public debt-to-GDP ratio increased more than three times from 5.4% at the end of 2008 to 17.5% at the end of 2013. The external public debt to GDP ratio increased only 2.5 times from 8.0% at the end of 2008 to 20.9% five years later. The absolute rise of the domestic and external debt ratios was however pretty similar – around 12pps.

The structure of the country’s public debt changed significantly since the end of 2008 – in the sense of larger shares of Eurobonds and local currency bonds at the expense of fewer shorter-term bills. Thus, the share of Eurobonds in total public debt [under the national methodology] increased from 8.5% at the end of 2008 to 18.2% at the end of 2013. The share of local currency bonds increased over the five-year period even more robustly from 9.4% to 38.9%. The share of T-bills decreased from 8% to 4.1%. The borrowing from the own state reserve funds shrank from 39.4% to 7.6%.

Romania’s public debt service is expected to decrease to EUR 12.8bn in 2014 from EUR 14.9bn this year, according to data available at the end of 2013, the finance ministry reported. The forecast [available in the table below] includes, however, the short-term debt that is rolled over and will eventually generate higher payments in 2014 – compared to the estimates as of end-2013 that does not include repeated re-financing.

The external debt service – where the misleading effect mentioned above is not relevant, shows that the debt burden increases to nearly EUR 5bn in 2015.

  2013 2014 2015 2016 2017 2018
Public debt service [RON mn] 65,823.3 57,050.3 44,590.5 42,063.1 26,589.0 26,755.3
principal 55,581.8 46,098.6 35,833.7 34,842.6 21,032.1 22,171.2
interest, fees 10,241.6 10,951.6 8,756.8 7,220.5 5,556.9 4,584.0
Domestic debt service 53,990.4 43,882.9 22,763.2 27,484.0 14,077.7 7,383.7
principal 47,622.7 37,697.5 18,695.3 24,425.2 12,205.6 6,253.1
interest, fees 6,367.7 6,185.4 4,067.9 3,058.8 1,872.1 1,130.6
External debt service 11,832.9 13,167.4 21,827.3 14,579.2 12,511.3 19,371.6
principal 7,959.1 8,401.2 17,138.4 10,417.4 8,826.5 15,918.2
interest, fees 3,873.9 4,766.2 4,688.9 4,161.7 3,684.8 3,453.4
             
RON to EUR 4.42 4.45 4.4 4.4 4.37 4.37
Public debt service [EUR mn] 14,892.1 12,820.3 10,134.2 9,559.8 6,084.4 6,122.5
principal 12,575.1 10,359.2 8,144.0 7,918.8 4,812.8 5,073.5
interest, fees 2,317.1 2,461.0 1,990.2 1,641.0 1,271.6 1,049.0
Domestic debt service 12,215.0 9,861.3 5,173.5 6,246.4 3,221.4 1,689.6
principal 10,774.4 8,471.3 4,248.9 5,551.2 2,793.0 1,430.9
interest, fees 1,440.7 1,390.0 924.5 695.2 428.4 258.7
External debt service 2,677.1 2,959.0 4,960.8 3,313.5 2,863.0 4,432.9
principal 1,800.7 1,887.9 3,895.1 2,367.6 2,019.8 3,642.6
interest, fees 876.4 1,071.1 1,065.7 945.8 843.2 790.3
Source: FinMin            

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