Romania’s government, companies and citizens pay at this moment by far the highest interest rates rates among the 28 European Union member states, and the interest payment burden worsens every months, official data shows.
On Tuesday, Romania’s sovereign 10-year bonds yield, a barometer for the cost of financing in the economy, reached a fresh four years and two month high of 5.26 percent (mid-price or average of the bid and ask prices), amid growing concerns regarding domestic political tensions and the health of public finances.
The Ministry of Finance has delayed the release of 5-month public deficit until Wednesday night, and the data looks grim.
Official data shows that Romania’s general consolidated budget, which includes fiscal and social budgets of the government, registered after the first five months of this year a deficit of RON 8.14 billion, or 0.88 percent of GDP, compared with a public deficit of RON 2.17 billion (0.27 percent of GDP) in the same period of 2017.
But experts are particularly concerned about the rapid increase of government’s interest expenses. Official data show that interest expense rose by 35 percent during the first five months of this year, to RON 5.6 billion, from RON 4.1 billion in January-May 2017.
And the future looks grimmer, data suggest. The European Central Bank (ECB) and Eurostat data show that Romania pays the higher interest rates every month to finance its public deficit.
Romania’s companies and households also pay the highest interest rates in the EU to repay their loans, according to official data.
The highest long term interest rates – a Maastricht criterion – in the EU on June 26:
Romania – 4.81 percent
Greece – 4.12 percent
Hungary – 3.46 percent / June 20
Poland – 3.19 percent
Czech Republic – 2.18 percent
Bulgaria – 0.95 percent
The highest short term interest rates in the EU in May 2018 – 12-month rates:
Romania – 2.72 percent
Poland – 1.82 percent
Czech Republic – 1.12 percent
Hungary – 0.7 percent
Bulgaria – 0.52 percent
3-month interest rates:
Romania – 2.53 percent
Poland – 1.7 percent
Czech Republic – 0.9 percent
Hungary – 0.08 percent
Bulgaria – -0.02 percent