Romania's public funding allocated to households amounts to 17% in the first seven months of the year
Romania's Public Debt to Households Reaches Record High
The public debt payable to the population in Romania has reached a record high in recent years, with households now accounting for over 6% of total public debt. By the end of April 2025, this figure stood at RON 61.6 billion (approximately EUR 12 billion).
This significant increase is a marked shift from previous years, where the population's contribution to public financing was under 3%. In 2024 alone, the state borrowed approximately RON 32.7 billion from households, representing 16.7% of total public financing.
This trend is driven by the Treasury's increased issuance of government papers to households, a move that has contributed to the rapid increase in the public debt payable to the population in recent years.
The Ministry of Finance aims to continue this trend, with a strategy to increase the population's share of total public debt, particularly at attractive coupons attached to the bonds. Recently, the Treasury launched papers denominated in euros with a maturity of ten years, tapping into households' interest in foreign currency.
The public debt payable to the population serves as a stable source of capital for the state, especially with the attractive coupons attached to the bonds. This trend of relying on households' savings to finance the public deficit is ongoing, even as commercial banks reach their limits for financing the state.
According to data published by the Ministry of Finance and compiled by Cursdeguvernare.ro, the total central government debt stood at roughly 50.9% of GDP as of 2022. This figure aligns with the need to manage and finance debt sustainably through diversified sources, including the population.
The bond yield environment also impacts this financing strategy. The yield on Romanian 10-year government bonds has hovered around 7.3% in mid-2025, slightly up compared to the previous year, indicating market inflation and risk perceptions but remaining far below historical highs such as 14% in 2008.
The implications for the state's financing needs are significant. An expanding share of debt linked to households can reduce dependence on commercial banks and foreign creditors, providing diversified and stable funding. Attractive bond coupons issued to households help incentivize domestic savings channeled into public financing, potentially lowering refinancing risk.
However, higher government bond yields imply increased cost of borrowing, which might pressure future budgets if interest costs rise further. Utilizing domestic savings also helps manage exchange rate and external vulnerability risks compared to foreign debt.
The growth in household debt holdings reflects government efforts to tap into the country's increased money supply and available domestic liquidity, supported by increased money supply M1 levels reaching historic highs in 2025.
In summary, Romania's increased public debt owed to its population signals a strategic move to meet rising financing needs through stable, domestic capital sources. This trend has important implications for fiscal sustainability, cost of finance, and economic resilience, and reflects broader economic conditions including government borrowing limits with banks and evolving market yields.
The strategy of the Ministry of Finance involves increasing the share of public debt paid to households, a significant portion of which comes from the issuance of government papers to households for business purposes. This trend in finance is aimed at diversifying the sources for public financing and reducing dependence on commercial banks and foreign creditors.
The public debt payable to the population serves as a stable source of capital for the state, especially when attractive coupons are attached to the bonds, thus encouraging domestic savings and lowering refinancing risk.
