Moldova will reduce its domestic public debt by 4.9 billion lei in 2022 by reducing government securities (GS) issues on the primary market by the indicated amount and will not finance the budget deficit by issuing GS.
This is stated in the materials of the Ministry of Finance to the draft amendments to the Law on State Budget for 2022, which will soon be considered and approved by the government. As noted, the high rate of inflation led to a significant increase in interest rates in the market of government securities. Thus, the amount of 4.9 billion lei approved in the state budget to finance the budget deficit will be reduced, taking into account the market volatility and high interest rates. As a consequence, the draft amendments stipulate that the financing of the state budget deficit by issuing government securities will be zero, and the issuance of government securities in the primary market will be carried out only for the purpose of refinancing the domestic debt. According to the Ministry of Finance, the internal state debt of Moldova as of the end of February 2022 amounted to 33 billion 061.7 million lei, having decreased by 219.7 million lei (-0.7%), compared to the situation as of the end of 2021, the debt on government securities issued on the primary market amounted to about 18 billion 504.91 million lei, down by 273.2 million lei (1.5%) versus the end of 2021. According to the Ministry of Finance, in January-February 2022 the weighted average interest rate on GS sold at auctions amounted to 10.42% (by types of GS: 91 days - 8.99%, 182 days - 10.52%, 364 days - 10.63%, 2 years - 9.51%, 3 years - 7%, 5 years - 8.25%, 7 years - 10%), up by 5.47 percentage points compared to the same period last year. According to the Ministry of Finance, market volatility and inflation forecasts for 2022 will contribute to a further increase in interest rates on government securities in the primary market. // 15.04.2022 - InfoMarket
