Romania Public Debt To Widen To 40% Of GDP In 2011

In the absence of the recent additional spending cut measures agreed with the International Monetary Fund, the country’s government debt would reach 50% of GDP in 2011, Vladescu said.

He said Romania must borrow between EUR7.5 billion and EUR8 million to meet its budget deficit target of 6.8% of GDP for this year, which will widen the public debt to 36%-37% of GDP by year-end.

The authorities in Bucharest recently announced a series of austerity measures to reduce spending, including a 25% wage cut in the public sector and 15% cuts in pensions and unemployment benefits.

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Without these measures, Romania’s public debt would have risen by around EUR11 billion in 2010 and by some EUR9 billion in 2011, Vladescu said.

End February, Romania’s public debt stood at around EUR37 billion, or some 29% of the GDP.