Romania Raises 2024 Funding Plan

BUCHAREST (Reuters) – Romania has raised its 2024 funding plan by roughly a fifth to 217 billion lei ($48.3 billion), according to debt managers on Monday. This increase aims to secure financing for a larger budget deficit and pre-finance 2025 needs, especially amid a busy election calendar.

Initially, the funding plan was set at 181 billion lei, based on a deficit target of 5% of economic output. Debt managers report that they have so far covered 91% of this initial plan.

However, high spending has effectively sidelined the deficit target, leading ratings agencies and analysts to anticipate tax increases from 2025.

To mitigate currency exchange risks and bolster the domestic market’s capacity for bond absorption, the debt agency stated that additional net funding for 2024 will be sourced from both domestic and foreign avenues, including Eurobond issues, private placements, withdrawals from international financial institutions, and other channels.

Debt chief Stefan Nanu confirmed that the finance ministry plans to issue more non-green Eurobonds this year.

So far this year, Romania has sold over 83 billion lei in domestic bonds and treasury bills, aided by strong demand, while accessing foreign markets four times to borrow $4 billion and 7.2 billion euros, including green bonds maturing in 2036. Romania has also increased its retail bond sale volumes.

The country raised its funding target for 2023 twice, increasing it to 203 billion lei from an initial 160 billion lei to cover a larger-than-anticipated budget shortfall.

Major rating agencies have assigned Romania their lowest investment grades but maintain a stable outlook. Fitch affirmed Romania’s credit rating at BBB-, citing robust EU fund inflows. However, it stressed that the country needs to implement meaningful fiscal adjustments in the medium term, warning that fiscal slippage has harmed policy credibility.

Despite rising debt levels, Romania’s interest payment to revenues ratio stands at 6.4%, which is more favorable than the 7.5% peer median.

($1 = 4.4931 lei)