The financing plan from foreign markets has been exceeded, meaning that funding has already been taken for next year and the money is used to finance the deficit as a whole, Minister of Finance Eugen Teodorovici said on Wednesday.
He was asked on what the 5 billion euro drawn from foreign markets will be used, a larger amount than the planned 4.2 billion euro.
"The Finance Ministry is finally returning to a logical approach in the sense that it takes funding in better times even for the next period and it does not borrow when the demand is high, because that increases the cost of financing. The plan has indeed been surpassed in the sense that we have already taken for next year, so we pre-fund what we will have to fund next year. It is the correct approach that a normal state has," Teodorovici explained.
He explained that money is used to finance the deficit side and to honor outstanding payment obligations on the loans taken in the past.
On the other hand, Teodorovici pointed out that the current account deficit is a topic that must be of concern in order to precisely see how we can act so as to reverse this trend.
According to the issue prospectus posted on the Finance Ministry website, this year the ministry intends to attract financial resources from foreign markets by issuing Eurobonds in a volume of 4.25 billion euro (equivalent).
"Through external loans, the Finance Ministry is considering to reduce the refinancing risk by extending the remaining average life of the government securities portfolio under favorable cost conditions and diversifying the investment base as well as strengthening the existing foreign currency reserve available to the State Treasury," mentions the prospectus.
Last year, Romania went out on the international capital market three times, managing to take loans of 3.75 billion euro and 1.2 billion dollars.
Financing costs increased slightly in 2018, from 2.5pct for Eurobonds issued in early February for 12 years, to 2.875pct for the 10-year Eurobonds launched in autumn. For the Eurobonds with a maturity longer than 20 years, interest rates rose from 3.375pct in February to 4.125pct in October.