Moldova's national debt has reached a record high. But the main problem isn't its size

Moldova's national debt reached 147.73 billion lei by the end of August 2026—a new all-time high. Since the beginning of the year, the national debt has increased by 14 billion 952.6 million lei, or 11.3 percent: from 132 billion 777 million to 147 billion 729.6 million lei. Compared to the end of August 2025, it increased by 21.986 billion lei, or 17.5% : from 125.7436 billion lei. The debt-to-projected-GDP ratio rose from 33.9% a year ago to 38.1%.

However, it is not only the size of the debt that matters. Changes within the debt portfolio indicate that the government is becoming significantly more vulnerable to changes in interest rates, and the cost of servicing the debt is growing much faster than its nominal amount.

This is clearly evident in budget expenditures. From January through August 2026, Moldova spent 3.99 billion lei on interest and fees related to public debt, compared to approximately 2.65 billion lei during the same period in 2025. In other words, the cost of servicing the debt rose by approximately 50.6% over the year. The main increase came from domestic debt: expenditures on it rose from approximately 1.48 billion to 2.73 billion lei, or by about 84.5%. For external debt, the increase was significantly smaller—6.8%—rising from 1.18 billion to 1.26 billion lei.

According to the Ministry of Finance's methodology, this includes not only floating-rate debt but also domestic debt with a fixed rate and a maturity of up to one year, since it must be refinanced relatively quickly at new market rates.

This specific clarification from the Ministry of Finance is important. It would be inaccurate to assume that 62.5% of Moldova's total public debt has a floating interest rate. The Ministry of Finance assesses interest rate risk more broadly. This category includes floating-rate debt itself, plus short-term domestic debt with a fixed rate that must be refinanced soon. The higher market rates are at the time of refinancing, the more expensive the new debt may turn out to be.

For this indicator, the government set a 60% limit in the 2026–2028 public debt management program. As of the end of August 2026, the actual figure reached 62.5%. In other words, the benchmark set by the debt strategy has already been exceeded.

And this is not a one-time spike. At the end of 2022, the ratio stood at 47.8%; at the end of 2023, it was 50.8%; in 2024, it was 53.5%; and by the end of 2025, it had already reached 58.3%. Thus, in just under four years, the share of debt that is sensitive to interest rate changes or requires imminent refinancing has grown by nearly 15 percentage points, or one-third.

The change is even more evident in external debt, as the Ministry of Finance separately reports obligations with fixed and floating rates. In June 2025, fixed-rate debt accounted for 52.3% of external debt, while floating-rate debt accounted for 47.7%. By the end of August 2026, the proportions had reversed: fixed-rate debt stood at 45.6%, while floating-rate debt had risen to 54.4%. In absolute terms, external debt with floating rates reached approximately $2.82 billion. This increases the dependence of the cost of servicing this portion of external debt on changes in international interest rates.

Domestic debt has another characteristic: relatively short maturities. As of the end of August, 95.8% of government securities included by the Ministry of Finance in the relevant risk indicator are due to be redeemed within a year. Here, too, the established target has been exceeded: the government program calls for a maximum of 90%.

At the same time, the average maturity of the total government debt remains quite long: 7.7 years, and the share of total government debt due for repayment in the next 12 months stands at 33.7%, with the established maximum being 35%. Therefore, the problem lies not in the need to repay a large portion of the total public debt in the near future, but in the domestic market's heavy reliance on the constant refinancing of short-term securities.

Herewith, the terms of such refinancing are becoming stricter. During 2026, the National Bank raised the base rate from 5% at the end of 2025 to 9% effective September 17, 2026. A higher base rate creates conditions for an increase in government securities yields.

The debt portfolio continues to meet the limits set by the strategy. Domestic debt accounts for 39.4% of the total portfolio, with a minimum target of 35%, while external debt accounts for 60.6%. The maximum concentration of debt in a single foreign currency is 42.9%, with a limit of 50%. The average time to maturity is 7.7 years, with a minimum target of 6 years.

Furthermore, a significant portion of the external debt is owed not to commercial markets but to international financial organizations: approximately 90% of external obligations are owed to multilateral creditors. The largest of these are the IMF, the European Union, and World Bank institutions.

The main change is that public debt is growing alongside the share of obligations whose value is sensitive to interest rates or the need for refinancing. This effect is already evident in the budget: over the past eight months, debt service expenses have increased by about half. If this trend continues, what matters for the budget will no longer be just how much Moldova borrows, but also what portion of the government's future revenue will have to be allocated to servicing the debt already accumulated. // 29.09.2026 - InfoMarket.