The Italian bank’s analysts warn that the ambitious budgetary gap of 3% of the gross domestic product (GDP) for next year will be jeopardized by expenses ahead of elections. As a matter of fact, the bank expects a budgetary gap of 4.5% in GDP for 2012, wider than in 2011, and hopes that the International Monetary Fund (IMF) will keep it under control.
For the 2012 budgetary gap, funding needs are put at EUR6.4 billion, EUR0.6 billion above this year’s value.
Romania is set to hit the deficit target of 4.4% of GDP this year, even if the government decides to make some of the expenses of 2012 earlier, in the last quarter of 2011, UniCredit analysts believe.
Public debt funding needs will climb by EUR5 billion, to EUR16 billion.
As for funding alternatives, UniCredit forecasts borrowing from the domestic market will hit EUR19.6 billion in 2012, from EUR15.3 billion this year. Analysts have repeatedly warned that the structure of Romania’s debt has an unfavorable maturity profile, given the high weight of short-term borrowing.
However, analysts expect the Finance Ministry to further borrow through treasury certificate issues mainly, because of uncertainty caused by the debt crisis. At the same time, loans the ministry is set to contract from abroad will double, to EUR3 billion.
(English version by Catalina Apostoiu)