Romania's public debt-to-GDP ratio up 3.9pp ytd to 52.7% at end-Aug
<p>Romania's public debt rose by over RON 10 bln (EUR 2 bln) in August to reach RON 887 bln (EUR 178.2 bln) at the end of the month. The debt-to-GDP ratio calculated under ESA methodology, namely based on the latest available 12-month GDP, reached 52.7%, up from 50.0% one month earlier and 48.8% at the end of 2023.&nbsp;</p>

<p>Lower inflation and economic growth, besides the wider budget deficit this year, resulted in a faster advance of the country's indebtedness. Thus, the debt-to-GDP ratio rose by 3.9 percentage points (pp) in the first eight months of the year, after only 1.3pp in the whole of 2023.&nbsp;</p>

<p>Romania's government, under the medium-term fiscal consolidation plan, envisages the debt-to-GDP ratio to exceed 60% and not decrease below this benchmark before 2031 – when the budget deficit would be brought down to 2.5% of GDP from a 7.9%-of-GDP gap this year.&nbsp;</p>

<p>In absolute terms, the public debt increased by EUR 20.8 bln in January-August this year – less, but not far from the EUR 23.7 bln advance in 2023.</p>

<p>Of the RON 103 bln ytd rise in the public debt, nearly RON 50 bln was on the side of the domestic currency-denominated debt (48% of total public debt at the end of August), while the stock of public debt denominated in euros 42.5% of total) advanced by nearly RON 40 bln and the USD-denominated debt (9.3%) rose by RON 15 bln.&nbsp;</p>

<p><em>iulian@romania-insider.com</em></p>

<p><em>(Photo source: <a href="https://www.dreamstime.com" rel="noopener" target="_blank">Romolo Tavani/Dreamstime.com</a>)</em></p>