Romania's public debt to GDP ratio, expected to reach 33.1% this year, will not exceed 33.4% at the end of 2012 and will start decreasing as of 2013, according to the state secretary and head of Treasury Bogdan Dragoi, quoted by Mediafax. Notably, the ratio refers to the public debt, owed by the central and local governments to third parties, while the official ratio, released on a monthly basis by the finance ministry, includes also the financing from own resources (e.g. privatisation revenues). While the official ratio was reported at 39.4% at the end of June, we calculated a 33.3% ratio after filtering out the borrowing from own resources. The fiscal consolidation from 7.3% of GDP in 2009 to 4.4% this year and 3% in 2012 will support lower debt to GDP ratios, Dragoi explained. The 4.4%-of-GDP target will be met for certain, Dragoi assured. He expects the borrowing cost to lower, in line with the inflation, further easing the government's debt burden. Nonetheless, the Treasury is currently under pressure to rise the yields in the auctions organised on the primary market for rolling over the public debt. Separately, meeting next year's deficit target is a very challenging task and will require supplementary measures, the independent Fiscal Council warned. |
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