The course taken by the government to reduce the value of domestic debt caused a “cautious” beginning of the year. In January, the Ministry of Finance offered for sale a reduced, as compared to December, volume of SS in the amount of 2.450 billion lei, which was purchased “with reserve”, significantly exceeding the size of the announced emission.
The demand amounted to 3.1 billion lei, but in fact, 2.9 billion lei worth of government securities were sold, which is still more than the supply. At the same time, the biggest demand was for government bonds with a maturity of up to 182 days, for which the demand exceeded the Ministry of Finance’s offer by more than 0.5 billion lei, or 53%.
Experts attribute the banking activity on the primary market to the central bank’s monetary policy, which released additional liquidity to finance the budget deficit. Banks did not fail to take advantage of the favorable conditions, bearing in mind that the yield curve of monetary policy instruments is expected to decline this year.
According to the observations of economist Vladimir Golovatyuk, the yield level has already slightly decreased, although it remained at over 9% per annum. “So, the Ministry of Finance has managed to realize even more SS, planned for sale, and prevent the growth of yields,” – said the expert.
The Ministry of Finance in 2026 intends to issue government securities only at acceptable interest rates and will seek to extend the average maturity of the SS portfolio by issuing government bonds depending on investor demand and market conditions. Unlike last year, when even with good yields the volumes of issues offered for placement were periodically not redeemed.
This year, it is expected that the average interest rate on domestic borrowings will decrease and will amount to 8.5% per annum. At the same time, the redemption structure will mainly consist of short-term instruments (approximately 96.9%), while long-term instruments will account for 3.1%.
According to the plans, the internal financing of the state budget will be ensured by issuing SS on the primary market in the volume of 55,360.5 million lei and by direct placement to individuals through the electronic platform in the volume of 1,000.0 million lei.
According to the Finance Ministry’s estimates, the net financing from domestic sources will amount to 9,600.0 million lei. And the balance of the country’s domestic public debt will not exceed 63,066.4 million lei in nominal terms at the end of 2026, which will amount to 16.7 percent of GDP.
