Romania’s public debt increased by 22.9% y/y to RON 964.3 billion (EUR 193.9 billion) at the end of December, after it surged by EUR 36.2 billion during the year.  

The public debt leaped by RON 27.4 billion (EUR 5.5 billion) in December, although the Treasury has not issued any FX bond – the increase was driven by a balanced combination of bills and bonds issued on the local market, other cash management instruments, and loans from local banks.

The public debt to GDP ratio has increased by 5.7 percentage points (pp) during 2024 to 54.6% at the end of the year after it had hovered around 48%-49% over the past three years. The ratio is expected to advance further in 2025, though at a slower rate, given the 1.0-1.7pp fiscal consolidation from the massive 8.7%-of-GDP public deficit in 2024.

The last significant advance in Romania’s public indebtedness took place during the COVID-19 pandemic year 2020 (+11.6pp, but only EUR 25.8 billion in absolute terms) when the government borrowed heavily to finance aid while the nominal GDP contracted. 

The structure of Romania’s public debt at the end of 2024 was a balanced blend of local and foreign bonds, with the slice of bonds to households advancing at a relatively robust rate.

At the end of 2024, Romania’s outstanding FX bonds (the equivalent of EUR 74.8 billion) accounted for 38.6% of total debt – close to the volume of bonds issued on the local market in local and foreign currency: RON 372 billion or the equivalent of EUR 74.9 billion. 

The government bonds in the portfolio of local households (RON 49.4 billion, or EUR 9.9 billion) accounted for 5.1% of total public debt, up from 4.4% at the end of 2023.

The volume of outstanding loans accounted for 15.9% of the total public debt, down from 18.5% at the end of 2023.

The volume of outstanding FX bonds increased slightly faster than the volume of bills and bonds launched by the Treasury on the local market during 2024. Thus, the volume of FX bonds increased by EUR 15.1 billion (+25% y/y) during 2024 and accounted for 21.1% of the country’s GDP, up from 18.5% at the end of 2023. 

On the domestic market, the rise in the volume of outstanding bills and bonds rose by a similar amount (EUR 16.3 billion) – with a notable EUR 2.7 billion advance coming from households. 

Eventually, the volume of outstanding bills and bonds on the local market accounted for 25.0% of GDP, up from 22.5% at the end of 2023.

iulian@romania-insider.com

(Photo source: Alexandru Marinescu/Dreamstime.com)