Economist Volodymyr Golovatyuk comes to this conclusion, analyzing the structure of the government’s debt obligations.
“The domestic public debt exceeded 56 billion lei in March. Only during the month it grew by 445 million lei, and 94% of these loans went not to finance budget expenditures, but to repay past loans. Judge for yourself: in March, the government borrowed 6.8 billion lei on the domestic market, while 6.4 billion lei were used to buy back previously sold SS. The difference is the net financing of the budget,” the expert said.
This is not the first time this happens, and it resembles a financial pyramid – over time, it is necessary to invest more and more to ensure its sustainability. As a result, not only debt servicing costs are growing, but also the size of repayment of previously taken loans. Given the dynamics of sales, the situation will only become more complicated in the future, believes Vladimir Golovatyuk.
“In Q1 2026, the government borrowed 16.1 billion lei on the domestic market, of which 12 billion lei was used to repay past loans and only 4.1 billion lei to finance budget expenditures.”
Budget in deficit
To cover the budget deficit, the government will have to accelerate the pace of borrowing on the domestic market and stimulate the demand for SS with attractive rates, which will only result in an increasing burden of public debt. In the first quarter of 2026, the weighted average interest rate on auctioned bonds was 9.33%.
According to the Finance Ministry, since the beginning of the year, the country’s domestic public debt increased by 4,102.52 million lei and amounted to 56,097.34 million lei. According to the law on the state budget, the limit of the domestic public debt at the end of 2026 is set at 63.1 billion lei.
“The increase in the state debt in the first three months was due to positive net financing on the primary market of state bonds in the amount of 4,053.88 million lei in nominal terms, as well as – due to positive net financing from the direct placement of state bonds among individuals in the amount of 48.64 million lei,” the ministry said in a statement on the reasons for the increase in the domestic state debt.
