(Bloomberg) -- Romania had to tap part of its funding buffer to cover a peak in payments of about €6 billion ($6.3 billion) in the past two months amid rising political tensions that affected investor appetite, Finance Minister Marcel Bolos said.
Romania’s budget deficit, which was already poised to be the highest among European Union member states this year, will likely widen beyond the government’s target of 7% of economic output. The recent political crisis, triggered by the shock victory of a pro-Russian candidate in the first round of the presidential election, pushed Romanian bond yields higher.
“The first reaction came from banks, which stopped some of their lending to the state, for the temporary deficits in the treasury,” Bolos told reporters when asked about the impact of the political crisis. “There’s a lot of uncertainty until a new government is appointed and until it sets Romania’s budgetary policies. We hope this crisis stops soon.”
Treasury Chief Stefan Nanu clarified the minister’s statement in a phone interview to Bloomberg, saying only part of the amount was taken out of the buffer, which remains at “comfortable levels.”
Romania built up a warchest earlier this year when it borrowed a record amount of more than €18 billion in foreign currencies. Before the latest political upheaval, the treasury was planning to scale back international borrowing and rely more on the domestic market and multinational institutions for funding.
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