Romania’s public debt increased by RON 117 billion (EUR 23.4 billion) during 2023, which accounts for some 7% of the country’s GDP – not far from the EUR 25.9 billion advance marked during the COVID-19 crisis in 2020.
However, the public debt to GDP ratio edged up by only 1.7 percentage points (pp) to 48.9%, remaining safely under the 50% threshold.
Romania’s public indebtedness has remained moderate over the past three years thanks to a combination of inflation (particularly last year) and robust real economic growth. However, as both these factors are diminishing in intensity over the coming years, the fiscal deficit expected to remain around 6% of GDP for at least 2024-2025 will put pressure on the public debt to GDP ratio, eventually pushing it above 50%.
Although not at high levels in absolute terms, Romania’s indebtedness may hinder fiscal consolidation efforts in case the investors turn risk-averse to the region or Romania in particular.
iulian@romania-insider.com
(Photo source: Romolo Tavani/Dreamstime.com)
