Moldova’s public debt, currently at around 42% of GDP, is not in itself the biggest problem for the country’s finances. The real vulnerability is the rapidly increasing cost of servicing the debt, according to Oleg Tofilat, former head of Moldova’s railway company and current executive director of the Union of Transport and Road Workers.
“The fact that we have debt at 42% of GDP is not that much. The problem is servicing the debt,” Tofilat said.
According to him, Moldova currently spends around 6 billion lei a year on interest payments alone, a figure he considers extremely high given the country’s development needs.
“Six billion lei a year on interest is a lot,” Tofilat emphasized.
He compared the cost of debt servicing with the funds allocated to infrastructure. The Union of Transport and Road Workers is advocating for an increase in the road fund to around 3 billion lei. However, Tofilat noted that negotiations over infrastructure projects can take years, while interest payments must be made on time.
The former head of Moldova’s railway company also drew attention to the rapid increase in debt-servicing costs. According to him, these expenses stood at around 1.5 billion lei in 2021 but have now reached approximately 6 billion lei.
“We increased from 1.5 billion, around 2021, if I remember correctly, to 6 billion in five years. And this is going to get even worse,” Tofilat warned.
Another vulnerability he identified is the budget deficit, which is estimated at around 23 billion lei. Without other sources of financing, the gap between government revenues and expenditures effectively becomes additional public debt.
“We have a deficit of 23 billion lei. That automatically means our debt increases by 23 billion,” he said.
Tofilat warned that the problem will not end with the 2026 budget year. In his view, Moldova could enter 2027 with a deficit of around 20–25 billion lei, which would require the government to take on new debt.
“Next year, in the 2027 budget year, we will probably face something similar. The same 20–25 billion lei deficit. And again, we will go into debt,” Tofilat said.
He also raised concerns about the structure of domestic borrowing, particularly short-term loans taken from commercial banks in Moldova.
According to Tofilat, frequent refinancing exposes the state to additional risks and makes it dependent on market conditions.
“Not only does it carry a high interest rate, but it is also short-term, from our banks. You have to take it for half a year, and every six months you have to refinance. And that is a risk,” Oleg Tofilat explained.
In the former railway chief’s view, Moldova’s public finances should not be assessed solely through the ratio of public debt to GDP. The cost of servicing the debt, the maturity of loans and the frequency with which the government has to refinance them are equally important, particularly amid a budget deficit running into tens of billions of lei.