The rates are fixed for the entire circulation period, but may be revised by the Ministry of Finance every 14 days depending on the market. Individuals’ income is not subject to income tax, and the investments themselves are fully guaranteed by the state.
An increase in the rates on government securities (GS) will lead to an increase in Moldova’s state budget expenditures on servicing the domestic debt. Each percentage point of rate increase means that the Ministry of Finance will pay more money to investors (citizens and banks) as coupon income.
Only in the first four months of the current year 2026, the cost of servicing the entire state debt has already increased to 1.8 billion lei (against 1.3 billion lei in the same period last year). Out of this amount, the servicing of the domestic debt amounted to 1.3 billion lei.
Since interest expenses on SS are fixed in the budget as mandatory, their growth forces the state to cut or underfund other expenditure items, such as subsidies to businesses, infrastructure projects or social programs.
There will be no instantaneous jump on the old portfolio. Rate increase affects only new issues of GS. The Ministry of Finance will continue to pay the same fixed interest on securities, which citizens and banks bought earlier.
When old bonds with lower rates will be closed, the government will have to issue new securities at increased interest, which will fix high cost of debt servicing for years ahead, which is what is happening now.
