Romania will wait for the results of the presidential elections in May and new measures to reduce the largest budget deficit in the European Union before returning to international markets, said Treasury chief Stefan Nanu on April 24.
“The next FX bond issue will take place after the [May 4/18] presidential elections and after the expected [fiscal corrective] measures from the new government,” Nanu said in a Bloomberg interview in Washington, according to Ziarul Financiar.
“Everyone is talking about [the fiscal corrective package]. The rating agencies are also waiting for these clarifications,” he added.
The statement comes after the public deficit reportedly reached 2.3% of GDP in Q1, on a trajectory that leads to a full-year gap of some 9% of GDP (8.65% in 2024) namely 2pp above the 7% target. The International Monetary Fund (IMF) assumed a 7.8%-of-GDP public deficit this year, under the revised macroeconomic forecast for Romania. Official Q1 deficit figures are expected within a couple of days.
“Everyone is aware that additional measures are needed because budget execution does not look good enough to lead us to a 7% deficit,” the head of the Romanian Treasury admitted in the interview.
In Bucharest, finance minister Tanczos Barna, who attended the IMF/WB summit besides Stefan Nanu, constantly gave assurances that no tax hikes are envisaged this year – stressing at the same time that this depends on sticking with the planned budget execution. The official Q1 budget execution data may trigger the change in rhetoric if the 2.3%-of-GDP figure is confirmed.
In order to finance its budget deficit, even at a level of 7% of GDP (RON 133 billion of EUR 27 billion) as planned, Romania’s gross financing needs are estimated at RON 231 billion (EUR 46 billion), down from RON 252 billion in 2024.
The FX bond issues are planned at EUR 13 billion this year, down from EUR 18 billion in 2024. Romania already raised EUR 6.75 billion in two FX bond episodes in February and March.
Overall, the Treasury raised RON 94 billion (EUR 19 billion) from the domestic and foreign market in Q1.
The domestic retail market has emerged as a significant source of financing, with the government contemplating raising the target for this segment from RON 45 billion (EUR 9 billion) to RON 60 billion (EUR 12 billion) this year, according to Treasury chief Stefan Nanu.
iulian@romania-insider.com
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