“Although the government is determined to continue the fiscal consolidation process in 2013 and a new agreement with the International Monetary Fund and the European Union is very likely, the gross funding needs of the finance ministry will be roughly unchanged as compared to 2012,” Erste said.
Erste’s estimate includes interest payments, but does not take into consideration possible disposal of state assets.
The Austrian bank said Romania should tap international debt markets more often to cover its financing needs in 2013 and 2014, as the move would help consolidate the central bank’s foreign currency reserves, while providing longer repayment periods.
“This would alleviate funding pressure in the short term and reduce funding costs,” the report noted.
Another possibility would be the issuance of more long-term paper on the local market, with maturities of 10, 15 or even 20 years.
“This strategy would support a gradual shift in nongovernment lending from forex loans to leu-denominated loans in the following years because it would be a useful benchmark for pricing long-term loans in domestic currency,” Erste said.