Romania’s public debt stood at 37% of its gross domestic product (GDP), EUR47 billion euros at the end of May compared with 30.8% of GDP at the end of 2010. Out of the total 94.2% accounted for public government debt and 5.7% for public local debt.
The loan the councilors are considering equals the revenue of the municipality for almost one year, which stood at EUR833 million in 2010 and is put at EUR1 billion for 2011.
Loans in the range of hundreds of millions of euros have been previously taken out while Adriean Videanu was general mayor (2005-2008). Some of these loans fall due over the next few years and are supposed to be paid with the new loan as stated in the project.
The payment spike of the loans taken out while Videanu was in office in 2005 is 2015, general councilors say. The current mayor, Sorin Oprescu, last year said that he was keeping EUR100 million of Videanu’s loan in the banks to repay it. Neither the former nor the current mayor were available for comment.
Municipal councilor Doru Giugulea says the money from the loan will also be used to pay the long-standing debts of RADET, the public corporation in charge of heating in Bucharest, to Electrocentrale Bucuresti (ELCEN), a major producer of electrical and thermal power in Romania.
According to the project to be discussed, EUR500 million of the EUR800 million to be borrowed should go to loan restructuring and, Giugulea says, probably to debt repayment, with EUR300 million left for new investments.
(English version by Loredana Fratila-Cristescu; Editing by Radu Bostan)