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stable, ending 2026 at 17.3%. This figure is significantly below the peer group median of 54.5%.
Fitch considers this debt to be fully foreign currency-denominated, reflecting Kosovo's use of the euro since 2002 (as it lacks a domestic currency). However, with 94% of the debt euro-denominated and no pressure on the exchange rate regime, currency risk is mitigated. Fiscal reserves, including holdings by the Privatisation Agency, are projected to end 2026 at 5.4% of GDP, down slightly from 5.5% at the end of 2023.
In October 2024, Fitch highlighted that Kosovo's external finances are less vulnerable to a sharp decline in diaspora inflows due to their relative stability over an extended period. Fitch projects that Kosovo’s net external creditor position will improve by 1.5 percentage points between 2024 and 2026, reaching 8.1% of GDP. This stands in stark contrast to the peer group median, which reflects a net debtor position of 15.7% of GDP. Additionally, the Central Bank of Kosovo maintains a €100mn repo line with the ECB, set to expire at the end of January 2025.
6.6 Budget and Debt – Moldova
Moldova’s budget deficit narrowed by 28% y/y to MDL6.7bn (€340mn) in January-October 2024.
Revenues grew by 9.5% y/y to MDL90.3bn while expenditures advanced much slower, by 5.6% y/y to MDL97.1bn.
The largest revenue was generated from the “taxes on goods and services” account (+12.5% y/y) – a category that includes the import/export duty. The central authorities in Chisinau started collecting dues in 2024 owed by companies in Transnistria. The revenues from income taxation also surged, by 21% y/y.
On the expenditures side, the 30% y/y drop in public debt interest, following the monetary policy rate cut, is notable.
Moldova’s deficit to GDP ratio decreased to 2.1% in the first ten months of the year, down from 3.1% in the same period of 2023.
The International Monetary Fund (IMF) projects Moldova’s fiscal deficit to decline from 5.2% of GDP in 2023 to 4.4% in 2024 and 4.0% in 2025.
In terms of deficit financing, the net foreign lending of MDL3.5bn in January-October 2024, down from MDL5.9bn in the same period of 2023, accounted for more than half of the period's public deficit.
The government did not rely on the domestic capital market and the issue of bills and bonds actually diminished to under MDL1.8bn from over MDL5.4bn in the same period last year.
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