By BUCHAREST (Reuters) – Romania has raised its 2024 funding plan by roughly a fifth to 217 billion lei ($48.3 billion), debt managers said on Monday, as it looks to ensure financing a larger budget deficit and pre-finance 2025 needs given a busy election calendar.
The country, the European Union’s second poorest member state, had an initial funding plan of 181 billion lei, based on a deficit target of 5% of economic output, and debt managers have so far covered it up to 91%.
However, high spending has effectively put the deficit target out of reach, with ratings agencies and analysts expecting tax increases from 2025.
“To limit currency exchange risks and develop the domestic market given its capacity to absorb bond volumes, we estimate … the additional net funding for 2024 will be balanced between domestic sources as well as foreign Eurobond issues, private placements, withdrawals from international financial institutions and other sources,” the debt agency said.
Debt chief Stefan Nanu told Reuters the finance ministry aimed to launch further non-green Eurobonds this year.
Romania has sold just over 83.0 billion lei worth of domestic bonds and treasury bills so far this year, supported by high demand, and has tapped foreign markets four times, borrowing $4 billion and 7.2 billion euros including 2036 green bonds. It has also increased its retail bond sale volumes.
Romania has raised its funding target for 2023 twice, arriving at 203 billion lei from 160 billion lei initially, to accommodate a larger-than-expected budget shortfall.
Major rating agencies have assigned Romania their lowest investment grades with a stable outlook.
Fitch affirmed Romania’s credit rating at BBB- with a stable outlook on Saturday, underpinned by strong inflows of EU funds, but said the country needs to enforce “meaningful” fiscal adjustment in the medium term, although fiscal slippage has damaged policy credibility.
“Despite the increasing debt, the interest payment to revenues ratio is 6.4%, more favourable than the 7.5% (BBB) peer median,” Fitch said.
($1 = 4.4931 lei)