“The forex buffer is EUR6 billion, EUR5 billion of which is in cash, while EUR1 billion is the financing line from the World Bank. I have issued an order to approve the setting up of a forex financial reserve to be at the disposal of the Ministry of Public Finances, which has been published in the Official Gazette,” budget minister Liviu Voinea told ZF.
The Finance Ministry has borrowed almost RON30 billion, EUR1.4 billion and $1.5 billion since the beginning of the year.
The state Treasury’s forex reserve, set up in line with the country’s arrangement with the IMF, has fluctuated over the years. The reserve needs to cover the gross financing for the budget deficit and the refinancing of the public debt for a four-month period.
Romania’s budget deficit is estimated at 2.4% of GDP this year, i.e. RON14.7 billion (EUR3.3 billion). In mid-year the deficit was 1.06% of GDP, according to Finance Ministry data. Romania’s public debt (in lei and in foreign currency) reached RON250 billion (EUR58 billion) at the end of May, up from RON240 billion at the end of last year.
The number of foreign investors buying Romanian government bonds has increases significantly, but analysts say Romania cannot risk to rely on this wave of enthusiasm and give up the state Treasury’s forex reserve because market sentiment can change just as fast.
(English version by Daniela Stoican)