The state plans to attract over RON 40 billion from the population in 2025 through the Tezaur and Fidelis government bonds, relying on the attractive interest rates these instruments have in comparison with the main „competitor” represented by bank deposits.
Last year, approximately 13% of the total amount borrowed by Romania (locally and internationally) came from the population, a record level. Tezaur and Fidelis instruments came to represent 4% of Romania’s total public debt, respectively 7% of the internal public debt.
Tezaur and Fidelis – every month, at increasing interest rates
„We don’t have an estimate (on the amount the state hopes to attract this year from the population, ed.n.). I can’t give you a figure. Last year we attracted 33 billion RON. We aim for more (…) If in 2023 we aimed for 13 billion more compared to the previous year, in 2025 we could aim for 40 billion, over 40 billion RON from domestic market loans „, stated Ștefan Nanu (photo), Treasury director, for CursdeGuvernare.ro.
In order to achieve this objective, the Ministry of Finance will increase the frequency of Fidelis issues in 2025 (these government securities are tradable, being listed on the Bucharest Stock Exchange), which will take place monthly. In 2024, six Fidelis issues were organized, with RON 7.77 billion and EUR 1.7 billion (the equivalent of RON 16.5 billion) being subscribed.
The state began borrowing increasingly substantial amounts from the population during the COVID-19 pandemic, when Romania’s budget deficit increased significantly. In 2021, for example, the state borrowed RON 9.3 billion from the population, the equivalent to 7.7% of the total financing requirement. The amount tripled over the next three years.
When asked why the state opted for retail loans, Ștefan Nanu stated „it’s a matter of diversification. Several countries in the region have adopted a similar strategy. (…) Debt managers in Hungary, Ireland, Belgium, Poland have opted for retail as a financing instrument”.
However, economists warn that the shift to retail may indicate a saturation of traditional sources.
The Romanian banking system remains the most exposed in the EU to sovereign credit risk, with 25.6% of total assets linked to government debt.
„Government bonds already constitute a relatively large share of extremely liquid assets in RON, which limits banks to load significantly more government bonds”, Erste economists warn in a recent analysis.
„The first time an asset is sold, the first customers are always institutional investors, in this case banks or local funds. If we go for retail, it means that the institutional source has been saturated”, explained Adrian Codîrlașu (photo), president of CFA Romania, for CursdeGuvernare.ro.
But the resources of the population are substantial. At the level of November, for example, the population’s savings in banks (term deposits) alone amounted to over RON 197 billion, up 11.2% compared to the end of 2023, according to the most recent data of the National Bank of Romania (BNR).
Moreover, targeting retail customers involves higher operational costs, which is why it is generally the last option, Codîrlașu also pointed out.
Another option would be to attract more financing from foreign markets, but this could increase the currency risk associated with the public debt, considering that more than half is already denominated in foreign currency.
Deposits interests fall, securities interests on the rise
In mid-January, the Ministry of Finance launched the first Tezaur issue of this year, namely government bonds in RON with maturities of 1, 3 and 5 years, with annual interest rates of 7%, 7.5% and 7.8% respectively.
By comparison, in November, the average interest rate offered by banks for a new term deposit, in RON, was 4.8% per year, so more than two percentage points below the interest rate offered by Tezaur.
Moreover, if in the case of deposits interest rates are decreasing, in the case of government bonds they show an upward trend.
For example, for the same deposit, commercial banks paid on average an annual interest of 5.9% in December 2023. In the Tezaur November-December issue, the interest on government bonds with a maturity of one year was 6.15 % per year. Therefore, deposits had more attractive interest rates by more than one percentage point a year ago, while interest rates on Tezaur bonds increased in the last year by almost one percentage point.
The evolution is a consequence of the NBR’s key monetary interest rate reduction policy which sets the tone for market interest rates, as well as the precarious situation of public finances. Romania’s growing budget deficits have inflated the financing requirement to a record level in 2024, of RON 250 billion, investors (institutional) „taxing” this lack of discipline by requesting higher interest rates.
In 2025, Romania has a financing requirement of approximately RON 230 billion, RON 145 billion to be attracted from the domestic market.
Better interest rates, for greater risk
Adrian Codîrlașu claims that the rates of return attracted the savings of the population to government bonds. However, the president of CFA Romania warns that government bonds are riskier than bank deposits.
„The bank deposit is less risky because the nominal value is guaranteed (up to the ceiling). In the case of tradable government bonds, you might sell them at a loss if you don’t wait until maturity,” he warned, adding that this market risk forces the government to pay higher interest rates.
This phenomenon, selling at a loss, occurs when interest rates rise. For example, a Fidelis government bond in RON, with a maturity of 3 years, issued in December 2023, had an annual interest of 7.25% per year. A similar title, issued in December 2024 (also in RON, also for three years), had an average annual interest of 7.9% per year. Investors who hold the old bond should sell it at a lower price to make up the difference in yield. In the case of a deposit, regardless of the time of liquidation, the depositor receives the full nominal value, even if he loses the interest.
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