Since the beginning of this year, Moldova’s internal and external public debt increased by about 5.28 billion lei and almost reached 100 billion lei, to be more exact, according to the Finance Ministry, at the end of June 2023 it amounted to 99.94 billion lei.
In comparison to the situation at the end of June 2022, Moldova’s internal and external public debt increased by about 21 billion lei (it amounted to 78.9 billion lei last year), and in comparison to its level at the end of June 2021 (75.58 billion), before the PAS came to power the public debt increased by about 24.36 billion lei, mold-street.com reports.
External debt has the largest increase
This evolution takes place due to the external public debt, which increased by about three billion lei since the beginning of this year and by about 22 billion lei in the last two years, thus having increased to 63.12 billion lei.
In US dollar terms, the external public debt increased by about $313 million since the beginning of the year to almost $3.45 billion, mainly due to the inflow of foreign funds.
According to the Finance Ministry, the debt increased by more than $1.15 billion in two years.
The state budget law forecasts that as of 31 December 2023, the domestic public debt will not exceed 37.48 billion lei, while the external public debt will not exceed 85.02 billion lei ($4,141.3 million).
Domestic public debt is also increasing, but in a much slower pace. This process has a simple explanation: the sharp base rate increase in July 2021 by the National Bank decision, which made the Ministry of Finance significantly reduce the volume of loans on the domestic market due to very high interest rates.
The data show that since the beginning of the year, the domestic public debt increased by 2.32 billion lei and amounted to 36.81 billion lei at the end of June. The domestic public debt development took place mainly due to an increase in the issuance of Government securities on the primary market by 2,427.7 million lei at par, the Finance Ministry said.
State debt servicing for 6 months - 2.5 billion lei
The Finance Ministry’s data show that since the beginning of the year over 2.5 billion lei was solely spent on the state debt servicing (interest and commissions). The largest part of the sum was spent on the internal state debt - about 1.97 billion lei, while the external debt servicing was almost four times less - 558 million lei.
Despite the increase since the beginning of the year, public debt as a share of GDP fell to 32.4 per cent from 34.7 per cent at the end of 2022.
Data on the tradeeconomics platform also show that Moldova ranks 35th out of 44 European countries in terms of the public debt share in GDP, while countries such as Estonia, Russia and Denmark have lower shares. At the same time, countries such as Belarus, Sweden, Norway, Lithuania, Switzerland, Romania, etc. have higher shares of debt to GDP.
However, the biggest debtors in Europe are Greece, Italy, Portugal, France, Belgium and the UK, with public debt exceeding 100 per cent of GDP.