While everyone is looking at what Gigi Becali, George Simion, Călin Georgescu, Donald Trump, Putin, etc. And it does geopolitical scenarios, Romania's public debt increases accelerated. In 2024 the public debt (in lei and currency) increased by no less than 180 billion lei (almost 37 billion euros), from 784 billion lei to 964 billion lei. The public debt is made up of the internal debt, in lei and euros, and the external debt in euros, dollars or other currencies. In the last five years, the public debt of Romania has increased by 159%, from 372 billion lei to 964 billion lei. At the same time the GDP, ie the added value produced in the economy, increased by only 65%, from 1,066 billion to 1,766 billion lei last year. In 2024, at an increase in GDP in a nominal value of 10% and in a real value of only 0.9% (economic growth), the public debt made by the Ciolacu 1 government and approved by President Iohannis increased by 22%. So the public debt had a double annual growth rate compared to GDP, compared to the added value produced in the economy, and if we continue at the same pace (ie the government that is at the Victoria Palace and who will be in Cotroceni), we will hit a wall too quickly. According to the plan agreed with the European Commission at the end of last year -the national and long -term national structural budget plan (PBSTM) -by 2031 the public debt will increase 1,737 billion lei, ie another 80%, while the GDP should increase to 2,848 billion lei, ie by only 61%. This means that we will continue to accumulate public debt because of the budget deficits we will have, even if the annual deficit should be reduced from 7% of GDP to 3% of GDP in the next seven years. This increase in public debt must be financed by someone. And the internal market will lose its finance power at one point, and then the government must rely on international creditors, foreign banks, on investment funds or other external portfolio investors. If the public debt will grow relentlessly (hope is not to grow more than forecasts), as things look now, we are about to derail
from reducing the deficit right from the first year. The problem is at the economic growth, where, apart from some figures put in a powerpoint, the Ciolacu 2 government does not have much extended plans. The industry stagnates in the best case, the IT has little and enters the minus, the financial system beats on the spot, the real estate transactions are decreasing, the constructions overall are stupid even if in the public infrastructure works, money is pumped, agriculture decreases, and the trade, the number one, reduces its speed on the fund. The government can no longer use the engine of increasing the debt to inject money in the economy, because it will not have anywhere. And, anyway, the growth of debt has an effect contrary to the intention. For example, although the Ciolacu 1 government injected 153 billion lei in the economy through last year's budget deficit, increased salaries, pensions increased in imports, trips and holidays abroad, in money. Pumping money in the economy last year, in the election year, did not help Prime Minister Ciolacu 1, who lost the presidential elections, nor the PSD, who has reduced his political power, registering the worst result since he was in government. If the internal economic growth engines fell one after the other, now the luck of Romania could be the European Army Program of 800 billion euros and, more directly, the German economic relaunch plan of 1,000 billion euros, for which the future Berlin government obtained the internal political approval. Romania has in Germany the main commercial partner on both exports and imports, and the Romanian industry is directly correlated with the German industry. Of the former communist countries, Romania has the most faithful correlation with Germany, in the industry area, that is, if the German industry is in recession, as it has been in the last three years, and the Romanian industry, where a good part belongs to multinationals, is affected. If somehow the companies in Romania, both the multinational and the Romanian ones, interfere in this plan of re -monitoring of Europe, and especially in the German economic relaunch plan, the Romanian economy will also be relaunched. We also have the engine of European funds, but here things go so hard, especially in the PNRR program that you cannot rely on it. However, many external investments depend on what is happening in the political and social area of Romania more than we believe. The big international groups, whether they are from the industry area and even from the financial area, are waiting for the result of the presidential elections to see where Romania goes. It does not help us at all the populist/ sovereign/ nationalist internal rhetoric, but neither geopolitical changes nor the rhetoric of the new American administration helps us. Without external investments, without the European money, without the foreign institutional banks, without the foreign investors who buy the debt of Romania we will do much harder. In order not to get back to the wall on the financial markets, we need the growth rate of the economy to overcome the increase of debt growth. And at this moment, it's a bit hard.
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