The foreign currency reserve of the Ministry of Public Finance (MFP) is about EUR 6.3 billion and is made available to the State Treasury for prudential purposes, in order to limit the risk of refinancing, a press release informs on Thursday.
The Ministry specifies that the government debt management strategy was revised for 2017-2019 to be in line with the budgetary indicators provided by the medium-term fiscal and budgetary strategy and to complement the previous strategic document.
According to the cited source, the MFP main objectives in regard to the government debt management for 2017-2019 are the development of the domestic government bonds market, the limitation of risks associated with the government debt portfolio and the need to finance the central public administration as a result of costs minimization over medium and long term.
“In order to increase the individuals accessibility to the purchase of government bonds, the ‘Tezaur Programme’ will be introduced, through which the population will be able to subscribe treasury bonds at the State Treasury territorial units, and the FIDELIS programme of government bonds for the population through the stock market will continue,” the source informs.
According to MFP, during 2017-2019, Romania will cover its funding needs by issuing government bonds issued on the domestic market, by issuing Eurobonds on international capital markets and, in addition, by contracting foreign loans from official creditors (financial international institutions) on advantageous conditions for the Romanian state.
Estimated budget deficit of the central administration in 2017 – 3.35% of GDP
MFP estimates a budget deficit of 3.25% of GDP in 2017, calculated on the basis of cash data by applying the EU methodology, the government debt management strategy for 2017-2019 reads.
Economic growth is forecast at 5.2% and a nominal GDP amounting to RON 816.5 billion. The current account deficit is estimated at 2.4% of GDP, the inflation rate at 1.9% at the end of the year.
MFP expects gross funding needs at EUR 63.9 billion.
The Finance Ministry also says that external shocks associated with risks could lead to lower economic growth, by falling exports or capital exit, could increase the funding risks in less advantageous funding conditions, corroborated with an increased risk from investors.