Public debt above €10.7 billion; experts warn after second budget rebalance
Officials approved a second rebalance that includes a €150m mini-eurobond at 5.25% and leaves the deficit projected at 4.1% of GDP.
Public debt in North Macedonia has risen above 10.7 billion euros and fiscal experts warn the second budget rebalance approved this month pushes the ratio close to — and projected beyond — the 60% public debt ceiling relative to GDP.
Analysts: crossing 60% raises long-term cost and market risk
Official figures show public debt at the end of the second quarter stood at just under 59% of GDP, or over 10.7 billion euros. Finance Ministry documents cited in planning note the ratio is expected to exceed 60% and to remain at that elevated level through 2028 if current trends continue.
Former finance minister Kiril Minovski warned that the ceiling has already been breached in practice: "We have already exceeded this threshold; these are generally accepted criteria for good public debt management. Exceeding this limit does not mean that Macedonia in the coming period will not be able to borrow, however the pressure on the budget will increase, future borrowings are unpredictable as to what interest rate they will carry, and what conditions will be on capital markets," he said.
The latest rebalance also includes a new borrowing operation: a mini-eurobond of 150 million euros carrying a 5.25% coupon. The finance minister stressed the issuance was planned, but analysts point out that the cost of that debt is higher than the projected economic growth rate, which weakens the capacity to generate the added value needed to service future liabilities.
The rebalance reduces both revenues and expenditures by 86 million euros each and leaves a deficit projection of 4.1% of GDP, above the stated limit. Growth is forecast at 3.5% and inflation at 3.8% for the period covered. Authorities say another adjustment and reallocation of funds before year-end is likely.
Experts caution that continued borrowing at rates above economic growth will increase budgetary strain, and that the economy’s current structure — with a heavy services focus and limited productive depth — may make sustaining higher debt levels more costly over time.
Photo: press material from the event
