The high cost of servicing is driven by interest rates. Although total external debt is often higher than domestic debt, higher interest rates on domestic government securities (GS) make their servicing more burdensome for the budget.
In addition, SS often have shorter maturities than long-term external borrowing, requiring constant refinancing.
“In the first 3 months of 2026, the state budget expenditures on servicing the state debt amounted to 1.1 billion lei: including 400 million lei on external debt and 700 million lei on domestic debt. A year ago, respectively, it was 800, 450 and 350 million lei, i.e. the expenditures for servicing the external debt have decreased, while the internal one has practically doubled,” economist Vladimir Golovatiuc said.
The main reason for the more expensive domestic debt is the need to raise funds on the local market at a higher interest rate (9.5% per annum) than on external soft loans from international partners.
In 2025, about 354 million lei was spent on interest payments on domestic debt, while on external debt – 454 million lei, despite the fact that the volume of external debt is much larger. At the end of 2025, the share of domestic debt amounted to about 38.9% of the total debt.
Since the beginning of 2026, the internal state debt has grown by 4.5 billion lei and amounted to 56.5 billion lei in April. External public debt is also growing, amounting to $4.9 billion at the end of March 2026.
