Romania’s public debt-to-GDP ratio up 12.4pp y/y to 47.7% at end-2020

Romania’s public debt-to-GDP ratio up 12.4pp y/y to 47.7% at end-2020
By bne IntelliNews February 25, 2021

Romania's public debt reached RON498.3bn (€102.3bn) at the end of 2020 after it leapt by RON34.4bn in December alone.

The two Eurobond issues launched by Romania at the end of November 2020 to build up the buffer, €2.5bn altogether, were apparently disbursed in December — but even so, the supplementary public borrowing remains high.

The debt-to-GDP ratio rose to 47.7% of GDP at the end of 2020, after a 3.3pp advance in the last month of the year.

Last year, Romania's public debt increased by RON125bn, and the debt-to-deficit ratio advanced by 12.4pp from 35.3% at the end of 2019.

Meanwhile, Romanian foreign debt increased from €109.8bn as of end-2019 to €125.5bn as of end-2020, according to the National Bank of Romania. 

Public indebtedness increased amid governments' efforts to support the private sector and address the health crisis not only in Romania but across the whole of Europe.

Romania's economy contracted last year by 3.9% compared to 2019, a better result than previous estimates, and the budget deficit widened to 9.7% of GDP.

This year's moderate fiscal consolidation is likely to keep the public deficit at an elevated level of above 7% of GDP, which is expected to bring the public debt up to over 50% of GDP.

On the upside, the robust buffer announced by Prime Minister Florin Citu and the positive GDP growth are cushioning the pressure generated by the large financing needs.