Moldova’s government budget deficit is growing rapidly because current revenues and foreign loans are not keeping pace with expenditures. According to data from the Ministry of Finance, as reported by LP, the deficit increased by 21% in the first half of 2026, reaching approximately 9.21 billion lei.
Budget expenditures rose by 4.2% (to 46.2 billion lei), while revenues increased by only 0.7% (to 37.03 billion lei). Meanwhile, external grant receipts fell to 370 million lei, compared to 2.13 billion lei during the same period last year. As a result, a significant portion of funds is being used to cover old debts and current needs, which is placing additional strain on the treasury.
Public Debt Is Growing in “Spurts”
According to official reports from Moldova’s Ministry of Finance for the first half of 2026, public debt figures were driven by a 5,349.25 million lei increase in domestic debt since the beginning of the year, while the trend in external debt (which stood at 4,836.68 million U.S. dollars at the end of the half-year) depended on exchange rate fluctuations and external financing.
The agency publishes the exact aggregate figures for the increase in total (domestic + external) public debt in leu equivalent as of June 30, 2026, in the full text of its monthly statistical bulletin. Looking at the trend for the first four months of 2026, total public debt increased by 9.6 billion lei. However, the trend has changed in recent months—and differently in lei and U.S. dollar terms.
According to calculations by economist Vladimir Golovatiuc, external debt in June, as expected, decreased by $80 million compared to the previous month, totaling $4.837 billion.
“This occurred not only because repayments of previously received loans exceeded the volume of new loans, but also as a result of the dollar’s appreciation against other currencies in which the debt is denominated,” the expert writes. “A total of $9 million in external loans was received, while $23 million was repaid. At the same time, as a result of the strengthening of the U.S. dollar, the dollar value of the debt decreased by an additional $67 million.”
As for external debt in MDL, the depreciation of the Moldovan leu against the USD, on the contrary, increased the debt (by 220 million lei), bringing it to 85.4 billion lei, compared to 85.2 billion lei a month earlier. Thus, exchange rate differences affect the figures in different ways.
“As a result of the domestic public debt decreasing by 520 million lei in June—a reduction that was not offset by an increase in external debt (in MDL)— the total debt was 300 million MDL lower than its May 2026 level. Consequently, for the first time since July 2025, the government’s net financing—including both domestic and external—was negative, amounting to MINUS 730 million MDL,” summarizes Vladimir Golovatiuc. He notes, however, that behind all these dry figures “lie real problems the government faced in financing budget expenditures, despite increased borrowing.”
The public debt ceiling is approaching
Since the beginning of the year, the government has borrowed more than 10 billion MDL; a year ago, it borrowed 5.8 billion lei, and in 2022, 1.1 billion lei. Thus, the government is well on its way to meeting the limits set in the budget, where the total debt ceiling at the end of the year is set at 156.04 billion lei. In just six months, the total public debt has already reached 142.8 billion lei.
Based on the current pace, this year’s public debt limits will be exceeded. Alternatively, regulatory amendments will be introduced to raise the ceiling, which, on the one hand, will not provide any tangible benefit in financing the budget deficit unless external loans from the European Union cover it. On the other hand, they risk causing delays in meeting obligations to domestic and foreign creditors if the situation does not change.
According to the Ministry of Finance, the trend in external liabilities for the first half of 2026 was determined by two factors. Net external financing, according to the Ministry of Finance, amounted to +136.0 million U.S. dollars (the amount of loans received exceeded repayments). Exchange rate differences reduced the debt figure by (-109.9 million dollars).
The main creditors—international organizations (IMF, World Bank, EIB, EBRD)—hold a key share of US$4.33 billion, while bilateral creditors account for a much smaller share (approximately US$506.38 million).
“Money from under the mattress!”
Relying on increased borrowing—which goes mainly toward servicing debt obligations—without having the funds to finance rising expenditures is a vicious cycle, experts say. But unfortunately, there’s no way around it—default.
“It’s already clear to everyone that the economy isn’t working and isn’t providing the government with sufficient resources to solve all—or even the main—problems, but the government isn’t even supported by its own partners!” exclaims Vladimir Golovatiuc.
In the first six months of last year, the government received $435 million in loans, compared to $240 million now; and grants, respectively, amounted to the equivalent of 2.8 billion lei last year and 370 million lei over the first half of this year.
“Instead of being a source of additional revenue to finance budget expenditures, external loans and government securities have themselves become an expense item. In June, this required 700 million lei.
The irony of the situation is that in order to fully finance budget expenditures and repay previously taken loans, along with current budget revenues, 2 billion lei in past-year balances accumulated in treasury accounts were also used,” the expert explained, detailing the source of the funds.
