By Luiza Ilie
BUCHAREST, June 22 (Reuters) - Romania may tap bonds worth 4 billion euros ($4.46 billion) from foreign markets in 2018 and 3.5 billion euros in 2019, while its gross funding needs are seen falling, the finance ministry's 2017-2019 debt management strategy paper showed on Thursday.
It estimates gross funding needs at 62.6 billion lei ($15.25 billion) and 60.4 billion lei in 2018 and 2019, respectively, down from this year's estimated 63.9 billion lei.
The gross funding needs estimated for this year are slightly lower than the 67 billion lei envisioned in February.
The paper was published one day after the ruling Social Democrats and their junior coalition partner ALDE toppled their own Prime Minister Sorin Grindeanu in a no-confidence motion after barely six months in office.
They will nominate a new prime minister on Monday, who, if endorsed by the country’s president will then need to form a cabinet and secure parliament’s approval in a vote, ending political gridlock in the European Union’s fastest-growing economy.
The debt outlook was based on economic growth expectations of 5.5 percent next year and 5.7 percent in 2019. Analysts, the European Union and the International Monetary Fund have all said this year’s 5.2 percent growth forecast is optimistic.
They and ratings agencies, have also expressed concerns previously approved public sector wage hikes and a range of tax cuts will drive the budget deficit above the EU’s ceiling of 3 percent of gross domestic product.
The budget ran a small surplus at the end of April. Inflation returned to positive territory in January after a year of negative figures due to a value added tax cut, but was expected to stay within the central bank’s targets.
"The evolution of fiscal and budgetary policy, a medium term rise of the budget deficit, the possibility of delaying structural reforms are among the domestic risk factors," the debt strategy said.
"So are market expectations of interest rate rises in the short term given the return to positive inflation."
The ministry also said Romania's hard currency funding buffer currently stood at 6.3 billion euros, giving it ample room to tackle volatility spikes.
So far this year, Romania has sold roughly 23.52 billion lei and 240 million euros of domestic bills and bonds. It has tapped foreign markets for 1.75 billion euros.
Romania is rated an investment grade Baa3 by Moody's and BBB- by Fitch Ratings and S&P. ($1 = 0.8961 euros) ($1 = 4.1039 lei) (Editing by Jeremy Gaunt.)