Romania's public debt to GDP ratio, 52.4% at the end of February, will drop to 48%-49% "during this year," prime minister Marcel Ciolacu assured, speaking in a press conference in Buzau on May 8, quoted by Economica.net. 

However, this is not highly likely, and even the 50%-of-GDP benchmark is under threat.

Romania's public debt at the end of February (RON 841.3 billion) reached 47.6% of the full-year projected GDP (RON 1,767 billion). The public deficit was under 1.7% of the year's projected GDP at the end of February and is planned at 5% of GDP in full year with a 3.3%-of-GDP deficit hus planned for March-December on top of the 47.6% end-February indebtedness.

Furthermore, both the 3.4% GDP growth and the 5%-of-GDP public deficit target are on the optimistic side.

"There was a [debt] repayment spike [in Jan-Feb], and that's nothing unusual," PM Ciolacu argued.

Marcel Ciolacu also pointed to the strong public investments financed from the national budget and the EU funds, some RON 30 billion (EUR 6 billion) in Q1. 

The investments, particularly in large infrastructure projects, will push up budget revenues in the future, he assured. He said public investments may hit 9% of GDP this year, from 7.2% of GDP (RON 100 billion or EUR 20 billion) in 2023.

PM Ciolacu (Social Democrats, PSD) politicized the topic in the electoral context, pointing to the sharp rise in public indebtedness during the former Liberal (PNL) cabinets of PM Florin Citu and PM Ludovic Orban (January 2020 to November 2021) from 35% of GDP at the end of 2019 when the Social Democrats were replaced at rule despite the best score in general elections.

However, the public indebtedness in 2022-2024 was not much softer in absolute terms: EUR 23.7 billion in 2023 (Ukraine war) compared to EUR 25.9 billion (Covid-19 crisis), while the inflation and resilient economy prevented a similarly steep rise in the debt-to-GDP ratio.

iulian@romania-insider.com

(Photo source: Inquam Photos/Octav Ganea)