Romania still expects total disbursements worth EUR 8 billion (EUR 1.5 billion in loans and EU 6.5 billion in grants), under the fifth and sixth requests.
Romania must submit the documents related to its fifth and sixth RRF payment requests to the European Commission by November 12, and the Commission is expected to decide on disbursement by November 20.
Actual payments are typically made with a delay, which could complicate cash flows towards the end of the year and affect the cash deficit.
Separately, projects financed by RRF grants must be completed by December 2026, and Romania will have to return in 2027, on a pro-rata basis, the funds associated with projects that have not been fully completed. The deadline for submitting detailed documentation on the reforms implemented under the RRF and the projects financed under PNRR is March 30, 2027, while the PNRR itself ends on June 30, 2027.
RRF implementation, including compliance with milestones and completion of projects, is the main risk to this year’s budget execution. Nevertheless, the Council considers a cash deficit of 6.25% of GDP feasible at this stage.
Other risks stem from payment obligations incurred by the state, both earlier and more recently, including salary entitlements claimed by magistrates, as well as potential external shocks.
The budget execution figures for the first nine months of the year, showing a cash deficit of 3.8% of GDP compared with 5.35% in the same period last year, should be assessed in light of potentially deferred payments. These include, in addition to the magistrates’ salary claims, possible delays in payments to contractors working on projects financed under the Anghel Saligny public investment programme or the RRF, as well as other unplanned expenditure, the Council recommends.
Romania still needs to borrow EUR 15 billion by year-end, including EUR 9.5 billion on foreign markets.
In the context of these budget execution risks, the Fiscal Council estimated that Romania’s financing needs for the remainder of the year amount to RON 80 billion (EUR 15 billion), comprising RON 29 billion on the domestic market and RON 51 billion (EUR 9.5 billion) on foreign markets. Romania has put foreign-currency bond issues on hold until a fully fledged government is appointed. Initially, the financing needs were expected to be covered by domestic and foreign markets in roughly equal proportions.
Full-year financing needs were estimated at RON 278.5 billion, including RON 127.8 billion to finance the public deficit, subsequently revised to RON 130.3 billion, and RON 150.7 billion to refinance existing debt.
Leave a Reply