Romania’s public debt reaches 35 percent of GDP at EUR 51 bln

The public debt of Romania has almost doubled in the last four years, reaching EUR 51 billion this year, which is 34.7 percent of GDP and making it the fourth least indebted nation in the EU, according to PM Ponta. The debt per capita has soared from EUR 1,400 in 2008 to EUR 2,500 at the end of 2012.

The government plans to bring the GDP to a pre-recession level of EUR 140 billion, after it sank to EUR 118.3 billion in 2009 – when the financial crisis started to wreak havoc in the domestic economy. Each Romanian has to generate EUR 7,000 this meet the GDP figures.

Meanwhile, the budget deficit is expected to be lowered to EUR 3 billion, adding another EUR 150 to the public debt level of every Romanian. The budget revenue is set to reach EUR 46 billion.

The debt level places Romania behind Estonia, Bulgaria and Luxembourg, which are the least indebted EU members.

“All the other countries have a larger debt compared to Romania, which is a good point for us,” said the PM.

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This year, Romania’s outstanding debt reached EUR 14.2 billion, out of which EUR 1.2 billion has to be paid for an IMF/EU loan. The PM said this debt will be refinanced.

The government has allotted EUR 10.2 billion for the public sector wages and 11.1 billion will go for pensions. Romania’s social assistance expenses will reach EUR 4.4 billion, the lowest amount reserved in the budget compared to the EU 27.

Romania has to pay EUR 1.1 billion worth of subsidies and EUR 2.5 billion in interest for loans that were taken out in recent years.

The goods and services expenditure, which ensure the functioning of state institutions, reach EUR 7.6 billion, according to the PM.

Investments will amount to EUR 7.8 billion, out of which EUR 2.5 billion will come from EU funds. Romania will contribute EUR 1.4 billion to the budget of the EU this year.

The Healthcare sector has been granted EUR 6.2 billion, while Transport and Education got EUR 4.9 billion and EUR 4.4 billion, respectively. The Agriculture sector receives EUR 3.8 billion, excluding farmers’ subsidies coming from the Common Agricultural Policy.

Romania adds EUR 3.5 billion in fresh expenditure

The Ponta government has introduced EUR 3.5 billion in fresh spending this year, as it has to sustain the recovery of wages in the public sector and to start paying pharmaceuticals’ producers.

The public pensions will be indexed by 4 percent this year, leading to an additional cost of EUR 500 million. Another 100 million will be returned to pensioners to make up for the healthcare contributions that were illegally taken from seniors whose pension ranged in a certain amount.

The final tranche for recovering wages in the public sector stands at EUR 1 billion. The government has increased the co-financing foe EU funds by EUR 1 billion compared to 2012.

PM Ponta said the payment of pharmaceutical invoices will be made in 60 days, bearing an additional cost of EUR 800 million. At present, pharmaceutical producers have to wait for more than one year to be paid, seriously streching their cash flows.

Ovidiu Posirca