Romania's public debt reaches 56.3% of its GDP by the end of February
Romania's public debt has witnessed a significant surge, expanding by RON 26.5 billion (EUR 5.2 billion) within the initial two months of 2025, reaching an astounding RON 990 billion (EUR 199.1 billion) by the end of February, as per the Finance Ministry's data.
This steep increase has pushed the debt-to-GDP ratio to 56.3%, a hike of 1.5 percentage points from the closing figure in 2024.
As of February's end, domestic public debt stood at RON 493.8 billion (28.1% of GDP), while external public debt amounted to RON 497.0 billion (28.2% of GDP). The domestic public indebtedness increased by 0.5 percentage points, and the external public debt expanded by 1.0 percentage points during the first two months of the year.
Romania's public indebtedness saw a rise of 5.9 percentage points in 2024, following an 8.65% public deficit in cash terms and nearly 10% annual growth for the nominal GDP. Despite sluggish 0.8% real economic growth, the growth in the nominal GDP played a significant role in the increased indebtedness.
This year, there is an anticipation of a narrowed public deficit, which may relieve pressure on public indebtedness. However, a slower advance of nominal GDP due to a lower GDP deflator could make the positive impact on indebtedness less conspicuous compared to the previous year.
The European Commission's Spring Forecast of May 19 predicts Romania's public debt at 59.4% of GDP at the end of 2025, which will further increase to 63.3% in 2026. The prediction is based on projected 1.4% GDP growth and a 0.7 percentage point reduction in the public deficit to 8.6% of GDP, as per ESA terms, in 2025 from 9.3% in 2024.
The share of local currency-denominated public debt in total public debt decreased to 45.5% at the end of February from 46.5% at the end of 2024. Conversely, the share of public debt denominated in euros increased from 40.5% to 41.2%, with public debt denominated in other currencies accounting for 10.6%.
The rise in Romania's public debt in the first two months of 2025 was primarily due to the February issuance of EUR 4 billion FX bonds. Further advancements in public indebtedness are expected in March, when EUR 2.75 billion of FX bonds will be issued, bringing the total volume of FX bonds issued year to date to EUR 6.75 billion, towards a yearly target of EUR 13 billion. In April and May, Romania momentarily halted FX bond issues amid increased political turmoil.
However, bond issuances to households continued at a brisk pace until May, and even local individual investors showed caution amid the presidential elections. In the first four months of the year, Romania sold bonds worth over RON 21 billion (over EUR 4 billion) to households, while RON 25 billion in bills and bonds were issued on the interbank market over the same period.
[1] - European Commission's Spring Forecast 2025[4] - European Commission's Spring Forecast 2026
- The significant increase in Romania's public debt, as seen in the first two months of 2025, is primarily attributed to the issuance of EUR 4 billion FX bonds.
- To manage the growing public debt, there is an expectation that the local currency-denominated industry bonds could play a crucial role, as indicated by the decreased share of local currency-denominated public debt in total public debt.
