Romania’s public debt (chart) increased by RON7.4bn (€1.47bn) in April, despite a major RON23bn principal repayment that was apparently refinanced quickly, according to data published by the finance ministry. 

The stock of gross public debt reached RON852.8bn at the end of April, or 52.1% of the GDP in twelve months to March (latest rolling twelve-month GDP data available), up from 48.8% at the end of 2023. 

Romania’s government wasted no opportunity to borrow early this year: the public debt surged by RON69bn in the first four months of the year. By the end of the year, the public debt (and indebtedness ratio) is likely to see a leap similar in size to that of Covid year 2020 – which was also an electoral year, like 2024 is. 

The government has added increasingly larger increments on top of the public debt in 2021-2023 (€15.7bn, €17.8bn and €23.7bn) but the indebtedness (debt to GDP) ratio remained under 50% thanks to the robust inflation. This year, the increment will be larger (probably larger than the €25.9bn in 2020) and inflation (the rise in nominal GDP, more precisely – therefore a combination of inflation and economic growth) lower – with the result of the indebtedness permanently breaking the 50% threshold.

The public indebtedness ratio has remained above 50% for three consecutive months in 2024 (February-April), but the government failed to come up with a strategy aimed at bringing the ratio down, in line with the Fiscal-budgetary Responsibility Law. 

In the past, the ratio was provisionally reported above the 50% threshold but it was quickly revised downwards based on higher updated GDP. Intra-quarterly data is particularly prone to downward revisions. 

This time, however, the public indebtedness ratio has permanently crossed the threshold and will likely remain above 50% by the end of the year. 

A budgetary corrective package is unlikely, however, until after the parliamentary elections and the formation of a new executive – realistically speaking, in January 2025.