Tuesday, February 10, 2009

Romania 2009 domestic debt plans total 30 bln lei

BUCHAREST, Feb 10 (Reuters) - Romania's domestic debt plans for 2009 total around 30 billion lei ($9.14 billion), almost triple what it issued last year, the finance ministry said on Tuesday.

The ministry, which has already issued 8.1 billion lei of the total so far this year, also plans to borrow around 1 billion euros ($1.30 billion) from international markets, either as loans or eurobond issues.

Romania issued debt worth 12.5 billion lei in 2008, mostly in short-term paper as the global cash crunch pushed yields upwards. The ministry said 80 percent of its 2009 domestic debt plans will have maturities of up to 1-year.

'Given macroeconomic estimates and the budget deficit target ... as well as refinancing needs, funding plans for 2009 include an indicative volume of domestic treasuries' issues worth about 30 billion lei,' the ministry told Reuters in a statement.

The European Union state's centre-left government targets a budget shortfall of 2 percent of gross domestic product this year, which analysts say may be unrealistic.

Lavish social spending by the previous government has left Romania's coffers deep in the red and pushed last year's budget deficit to over 5 percent of GDP, significantly above the EU's 3 percent ceiling.

This exacerbates threats posed by Romania's vast current account deficit, which economists say makes the EU state one of the most vulnerable emerging economies in eastern Europe.

Already two major ratings agencies grade Romania's debt as 'junk'.

Earlier this week, central bank Governor Mugur Isarescu encouraged commercial banks to buy state debt, needed if they were to secure financing from the central bank.

In turn, Isarescu said, this would help build up a secondary debt market which has been slow to take off due to scant primary issues in recent years.

No comments: