Romania’s public debt hits 50% of GDP at end-May

Romania’s public debt hits 50% of GDP at end-May
/ bne IntelliNews
By bne IntelliNews August 16, 2022

Romania’s public debt reached RON614.3bn (€124.3bn) at the end of May after the government raised €1.75bn in the month with its third series of Eurobonds this year, the finance ministry announced.

The debt-to-GDP ratio hit 50%, from 49.1% at the end of April and 48.8% at the end of 2021 — but the ratio is expected to decrease by the end of the year, diluted by the inflation-driven nominal increase in GDP.

The country’s public debt thus increased by €7.5bn in the first five months of the year, half the increase during the whole of last year.

The debt-to-GDP ratio increased however by as much as 1.2pp, compared to the 1.4pp advance seen throughout the whole 2021. This was because nominal GDP in 12 months to March 2022 (the latest rolling 12-month data available) edged up by only 3.9% compared to the 2021 GDP — a moderate advance compared to the expected rise in the nominal GDP for the whole of 2022.

Under the latest projection from the state forecast body CNP, Romania’s GDP will increase by a nominal 16.2% this year.

Based on bne IntelliNews calculations and assuming a constant exchange rate, Romania’s public debt could increase by another RON55bn (€11bn) by the end of the year and the debt-to-GDP ratio would remain at 48.8%, as it was at the end of 2021.

The exchange rate effects are negligible for the local currency’s depreciation in the range of a couple of percentage points as expected by analysts.