Romania’s public debt (chart) decreased by RON6.25bn in June to RON724.bn (€146.0bn) at the end of the month, the Ministry of Finance announced. The debt-to-GDP ratio eased to 48.4% at the end of June from 48.8% at the end of May. 

By currency, the decrease was driven in June by the local currency-denominated debt (RON337bn or 47.5% of total public debt) that dropped by RON5.16bn, meaning that the bills and bonds maturing in June were not fully rolled over. The US dollar-denominated debt also decreased by the equivalent of RON1.33bn.

Compared to the end of 2022, Romania’s public debt increased by the equivalent of RON58.1bn (€11.7bn, or 3.9% of GDP) mainly due to sharp increases in January, February (when Eurobonds were issued) and May. The indebtedness increased, however, by only 1.1pp from 47.3% at the end of 2022 to 48.4% at the end of June – an advance that was moderated by the effects of the sharp nominal GDP advance; the 12-month rolling GDP advanced by 6.3% from December to June.

Looking further, Romania’s public financing needs have increased compared to the initial plans as the budget deficit heads towards 6.8% of GDP or 2.4% of GDP above the initial target. The government hopes to somehow keep the deficit at 5.5% of GDP which would moderate the unplanned financing needs, which remain significant. On the other hand, the nominal GDP keeps rising fast with positive effects on the indebtedness ratio.