Romania’s gross borrowing requirement increases this year, despite fiscal consolidation

In 2022, the gross financing need of the Romanian government, respectively the total volume of funds to be raised by the Ministry of Finance from the internal and external markets, is around 145.4 billion RON (29 billion euros, 11 % of GDP), about RON 10 billion (€ 2 billion) more than last year, according to the ministry’s “Indicative program for the issuance of government bonds for 2022”.

And this despite the public cash deficit forecast at 5.84% of GDP this year, against 7.1% of GDP in 2021.

To secure the necessary resources, the ministry plans to borrow around 14 billion euros on international markets, in particular by issuing Eurobonds for a volume of around 10 billion euros, depending on developments, conditions and opportunities offered by these markets, according to Cursdeguvernare.ro. The government also expects a disbursement of around 3.7 billion euros by the EC under the Recovery and Resilience Facility.

The increase (by 7.7% compared to 2021) in financing needs comes against a background of rising interest rates, as Romania borrows at costs well above the regional average.

This is the highest rate since March 2020 (when it reached 4.89%) – a record the year the pandemic broke after falling to just 2.65% in February 2021.

In the first 11 months of 2021, interest on the public debt rose 18.8% year-on-year to RON 16.6 billion.

As part of the budget and budget strategy for the period 2021-2024, it appears that interest will increase by 26.2% year-on-year to reach RON 18.3 billion (€ 3.6 billion) lei 2022 .

According to the latest Eurostat data, Romania’s long-term interest rate rose again in November 2021 to reach 5.11%.

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