Moldova’s Public Debt Crosses the 90 Bln Lei Mark

The internal and external public debt has increased by another four billion lei in November 2022, the Ministry of Finance data show. Thus, on November 30, 2022, the balance of public debt amounted to about 90.76 billion lei, which is about 13 billion lei higher than the end of 2021. Thus, the share of public debt in GDP reached 32.6%, mold-street.com reports. Since the start of the year, the external public debt has increased the most, by about 13.055 billion lei reaching nearly 57.53 billion lei. In dollar terms, the external public debt has increased since the start of the year by more than 460 million dollars and amounts to almost three billion dollars (2.969 billion dollars). At the same time, the domestic public debt decreased slightly by 46 million lei and amounted to about 33.24 billion lei as of November 30. In 2023, the cost of servicing the internal and external public debt will exceed 5.4 billion lei. According to the Ministry of Finance, the decrease in domestic public debt was due to reduced issuance of government securities (GS) on the primary market. The published data, however, show a significant increase in public debt servicing costs (interest and fees). Thus, since the beginning of this year they amounted to almost 2.5 billion lei. In November 2022 alone, expenses amounted to about 400 million lei. It should be noted that while in 2020 about 1.71 billion lei was required for servicing the national debt, in 2021 it was 1.94 billion lei and this year it will reach about 2.85 billion lei, a 47% increase. Next year, public debt servicing costs will almost double and are estimated at about MDL 5.41 billion. The biggest pressure comes from domestic public debt, the servicing costs of which are the highest. And while in 2021 they amounted to 0.6% of GDP, this year they will amount to nearly 0.9%, and next year they will reach 1.4% of GDP. According to the Ministry of Finance, in 2023-2025, funds of 3.24 billion lei (20.1% of total amount) will be used to service the external public debt and 12.86 billion lei (79.9% of total amount) will be used to service the internal public debt. Meanwhile, PAS vice-president MP Radu Marian argues that the share of public debt in relation to GDP is at a reasonable level, 39% of GDP. “The debt as a GDP share in 2023 will be much lower than, for example, in 2002 under the communists, when it was almost 60%, or as in 1998, when it was over 80%. Also, our debt is much lower than in Ukraine (61% of GDP), Romania (where it is 48%), not to mention Italy, Portugal or Greece, where the debt exceeds 100% of GDP,” the MP wrote in response to accusations that Moldova’s public debt will increase significantly in 2023. According to Radu Marian, it is absolutely normal for the state to take loans as long as they are granted under favourable conditions (e.g. low interest rates) and the money is used for things that bring long-term benefits. Note that data on the tradeeconomics platform show that Moldova's public debt is 32.1% of GDP. These figures coincide with those of the Ministry of Finance at the end of 2021, while at the end of October 2022 the share of external and internal public debt in GDP was lower and was 31%. Data from the Trade Platform also shows that Moldova ranks 36th out of 44 European states in terms of the share of public debt in GDP. More precisely, it ranks 7th in the top 10 European countries with the lowest share of public debt in GDP. The country with the lowest share of public debt in GDP is Estonia (18.1%), followed by Russia, Bulgaria, Kosovo and Luxembourg. On the opposite side are Greece, Italy, Portugal, France, Belgium, Cyprus and Montenegro, where public debt weighs more than 100% of GDP.