Romania will increase its planned sales of domestic debt this year by 50% as it seeks to raise the proportion of its debt in the local currency.
Romania will sell 12 billion lei ($4.8 billion) in Treasury bills and bonds, compared with the 8 billion lei originally planned, the Finance Ministry said in an e-mailed statement today. It will also hold debt sales more frequently. „The increase to the announced sum reflects growth of the ratio in financing in lei in all borrowing,” the ministry said. This „takes into account the objective of limiting hard currency risks in the public debt portfolio and of developing the local market.” Romania aims to increase spending on infrastructure and social areas to help it catch up to standards in other members of the European Union, which it joined on January 1. The government targets a 2007 budget deficit of 2.8% of GDP, from a deficit of 1.7% of GDP last year.
The International Monetary Fund warned Romania on March 6 that its budget deficit target is underestimated and that the shortfall may reach 3.8% of GDP this year, exceeding the 3% limit stipulated by the EU. Romania last sold domestic debt on March 12, selling 300 million lei in one-year Treasury bills at an average yield of 7.03%. The bid-to-offer ratio was 3.29. The Finance Ministry said it will hold sales of Treasury bills in the second and fourth weeks of each month and will sell Treasury bonds in the first and third weeks. The next sale is April 11. The ministry hasn't announced the details. The ministry also today reiterated plans to sell at least €500 million ($665 million) of bonds abroad this year, the first such sale in almost four years. (Bloomberg)