FinMin Citu: No need to resort to international or other markets, as Romania has managed its gov't deficit

Romania will end 2020 on a general government deficit lower than other countries in the European Union and will be the country to avoid technical recession, Finance Minister Florin Citu said on Wednesday evening, adding that currently he does not see the need for Romania to resort to international markets because it has managed to finance its general government deficit.

"The European Union has now an average deficit of 14%. Hungary, in the middle of the year, has a deficit of 6%, we have 4.44%. We started this period with a huge handicap because we had a deficit inherited from last year of 4.6%. Most EU countries would have a budget surplus in recent years. There are 11 countries that had a national budget surplus. All EU countries reduced their budget deficits in the last three years on economic growth. Only our socialists widened the deficit and postponed footing the bill. When adding up, Romania will end 2020 on a smaller deficit than all other EU countries, I hope it will be all the other; maybe one or two will have a smaller deficit. Romania had economic growth in the first quarter, the second largest in the EU. I am telling you that we will be the country that will avoid technical recession, which means two consecutive quarters of economic downturn," Citu told Digi24 private broadcaster.

He said that in terms of consumption, things are looking very good given the economic context, which means that purchasing power has been preserved.

Citu added that he does not see the need for resorting to the international markets because the deficit has been successfully financed.

"At the moment, I don't see resorting to international or other markets. We are OK. We look at every moment to see what happens. We have managed to finance this deficit (...) One can fund a deficit of 8.6% without the need for help from international institutions, funded only from the market, from trusted investors. Look at FIDELIS, a bond issue for individuals, for citizens, which is listed on the Stock Exchange; what a success we have had there. Every issue we did was oversubscribed with declining interest rates. We were the only government in Romania, and even before the British, to borrow at negative interest rates in euros," Said Citu.

He mentioned that the pandemic has incurred direct costs of 5 billion lei, but the indirect costs, represented by measures such as postponing repaying loans, and SME Invest, are much higher. He specified that these one-off costs are around 11 billion lei in 2020, or 1.1% of the GDP. However, these costs will not occur again next year.

On the other hand, the minister pointed out that problems will arise if the crisis in the EU economies continues.