(Bloomberg) -- Romania has completed its international borrowing for this year and plans to reduce sales of foreign debt through 2026, a senior official said.
The Black Sea nation wants to tap the domestic market and rely on loans from multinational institutions to cover the increased borrowing needs in the rest of this year as the government grapples with a wider-than-expected budget deficit, according to Treasury Chief Stefan Nanu.
The largest Balkan economy, which borrowed a record amount of more than €18 billion ($19.6 billion) in foreign currencies abroad this year, plans to gradually curb Eurobond sales in the next two years, provided that bigger inflows from the European Union’s recovery funds arrive as planned, Nanu said in a phone interview on Monday.
“We aim to reduce the supply and lower the pressure on yields externally, but this depends on the full implementation of the nation’s recovery and resilience program as we expect the bulk of funds to come in 2025 and 2026,” Nanu said.
The country stands to receive about €1.5 billion in funds from the EU and international financial institutions until the end of the year, which will also help reduce issuance on the domestic market, he added.
The budget deficit will likely widen to 7.9% of economic output this year — one of the largest in the EU — according to a recent estimate sent to the European Commission, the bloc’s executive arm. The wider shortfall will lead to an increase in funding needs to 235 billion lei ($51 billion) compared with previously expected 217 billion lei, Profit.ro reported last week.
The yield on Romania’s green bonds maturing in 2036 reached a four-month high of 5.93% on Monday.
©2024 Bloomberg L.P.
