Romania’s public debt-to-GDP ratio (chart) climbed to 54.4% at the end of September, up from 52.7% in August and 48.8% at the close of 2023, according to the latest official data. The figure might see downward correction as updated quarterly GDP data is released.

The debt increased by RON30bn (€6bn) in September alone, bringing the total to RON917bn (€184.3bn). This spike was driven by a €5bn international bond issuance on September 19, consisting of euro- and US dollar-denominated bonds.

The latest figures place Romania’s indebtedness above the 53.2% level projected by S&P for the end of 2025. The European Commission's November Autumn Forecast anticipates a 52.2% debt-to-GDP ratio for 2024, rising to 56.1% by 2025 and 59.7% by 2026, barring any corrective fiscal measures.

Romania's seven-year fiscal consolidation plan envisages 52.2% of GDP public debt at the end of this year followed by 55.7% at the end of 2025 and 58.5% at the end of 2026, predicting the debt will surpass 60% of GDP by 2027 and remain above this threshold through 2031.

Despite the sharp nominal rise, the impact of the rising public debt on the debt-to-GDP ratio has been tempered by Romania’s expanding nominal GDP this year. The 5.6 percentage point (pp) increase in the ratio for January-September 2024 contrasts with the 11.7pp jump during the COVID-19 year of 2020, when the government posted slightly lower net borrowing.

Domestically, the Treasury raised an additional RON9.6bn (€2bn) in September through local market instruments such as bonds and bills to address the growing fiscal deficit. However, with limited foreign issuance in the final quarter, financing needs will likely rely on domestic borrowing or reserves.

A higher GDP base used for year-end calculations may reduce the ratio somewhat, though likely not enough to reach the 51.7% forecasted by S&P.