The government changes the "course" for domestic debt - Long-term securities and fixed interest rates to cover the deficit
The government plans to support financing in the domestic market in the short and medium term in order to cover loan needs.
In the medium-term debt management strategy document 2026-2030, it is emphasized that the main instruments that will be used to secure financing are government securities (Treasury Bills and Bonds).
According to the document, the active management of liquidity needs will be achieved primarily through the issuance of short-term securities. Meanwhile, the new debt, intended to cover part of the overall deficit, will be covered through long-term securities.
"In order to further reduce interest rate risk, the Ministry of Finance plans to orient the borrowing policy towards the issuance of long-term instruments with fixed interest rates over the medium term. The issuance of instruments with variable interest rates will be considered only in special circumstances, when market conditions make the use of fixed instruments impossible or inefficient," the document states.
However, depending on developments in the domestic market (such as investor preferences and interest rate movements), the Ministry may carefully assess the limited possibility of using floating-rate securities, ensuring that any decision-making is consistent with the objectives of maintaining stability and prudent management of the risks of the public debt portfolio.
Domestic sources of financing are expected to rely mainly on the banking sector, while there are expectations for increased interest from non-bank investors, foreign investors and individuals.
On the other hand, the banking sector will tend to orient itself mostly towards treasury bills and securities with maturities of up to 5 years, due to the orientation of parent banks, as well as within the framework of restrictions related to liquidity ratios, capital burden and exposure to sovereign debt. However, the banking sector's orientation towards short-term securities is expected to be offset by the increase in demand in other categories and their orientation towards long-term securities.
The authorities estimate that this strategy will contribute to maintaining financial stability and more careful management of sovereign debt.
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