Romania's public debt leaps by 11bn euros in 2010

Romania’s public debt continued to rise last year at a fast pace of 31.6%, amid massive state borrowing, and reached 194 billion RON (46 billion euros), accounting for 38% of GDP.

“The growth rate of the public debt is significant. And its level has neared 40% of GDP. The situation is made worse by the fact that the debt structure has a big short-term component, which is more volatile. A problem we will have to solve is modification of the debt structure by extending loan deadlines,” comments Aurelian Dochia. Can Romania function without further boosting its public debt?

“The public debt is expected to stabilise. Now it is not small at all. We are nearing the maximum bearable limit. The important thing is to think why we are taking this debt on. If we boost the debt to finance wage and pension spending, the markets can become nervous. If we build motorways, it is not a tragedy,” believes Ionuț Dumitru, chief economist of Raiffeisen Bank.

The Finance Ministry has managed to slightly reduce the budget deficit last year, but the fast rate of growth of the public debt and the weak prospects of economic growth remain the main vulnerabilities.