TODAY the Government pays debts of 13 billion lei and ends a month with record payments to service the state’s debt

The Ministry of Finance has 13 billion lei to pay today on account of the loans taken in the past years. According to Profit.ro data, payments must be made to large investors, including banks and pension funds, who bought bonds issued in lei due on April 29, mainly in an issue launched in 2016, but through which the state later borrowed repeatedly. According to the planning of the Ministry of Finance, April is the month with the largest amounts so far allocated for the service of the state debt, of 28.58 billion lei, almost a quarter of the payments for the whole year.

The payment of such amounts is not a problem for the Finance Treasury, in the context where loans are planned rigorously during the year, including to ensure in time what is needed for more important payments. Also, the Finances have a substantial reserve in foreign currency, made up of previous loans, the purpose of which is to ensure the state’s flexibility in terms of repayments.

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The 13 billion lei paid on April 29 come from three bond issues on the domestic market

• 426.45 million lei, launched in May 2023
• 1.03 billion lei, launched in October 2023
• 11.57 billion lei, launched in August 2016 (this issue is one of those that the Ministry of Finance frequently reopens for loans)

Debt service per month

The government has to pay in April 28.58 billion lei for the service of the public debt, of which 23 billion lei for debt that has reached payment and 5.5 billion lei representing interest.

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The amount of 28.58 billion lei is a new monthly maximum. Previously, the highest monthly amount recorded for debt service was 25.1 billion lei in September last year. In recent years, the need for debt service has grown rapidly from year to year, due to the state’s high budget deficits.

This year’s funding requirement

Profit.ro wrote in April that Romania’s public debt increased in January to 801.69 billion lei, from 782.17 billion lei at the end of December, according to data from the Ministry of Finance. It is the first time that the state debt exceeds the threshold of 800 billion lei. Also, the degree of indebtedness, the debt relative to GDP, went from 50% in January to 50.2% of GDP, but this could be a temporary situation, in the context in which the Government borrowed a lot in January (subsequently and in February), and higher debt payments are later in the year, while in the following period the debt calculation base will also be increased (in the GDP of the last four quarters, to which reporting is done, the first quarter of this year will replace the first quarter of 2023).

For the year 2024, the Ministry of Finance has programmed loans of 181 billion lei, to pay the older debts that are coming due and to cover the budget deficit. The government public debt contracted in 2023, in the amount of 203.9 billion lei, covered the financing needs, consolidated the financial reserve in foreign currency at the disposal of the State Treasury and ensured the partial pre-financing of the financing needs for the year 2024.