Principles of Debt Management

Parliament sets a maximum outstanding amount of debt obligations when it approves the Annual Budget each year and the Ministry of Finance is allowed to assume short- and long-term debt obligations for the State within the approved limit. In 2026, the approved limit for short- and long-term debt obligations is EUR 14.3 billion, of which Ministry of Finance is allowed to assume new debt up to EUR 7 billion. Depending on the liquidity situation Treasury bills are issued under the T-bill programme according to decree dated 5 November 2020 of the Minister of Finance.

The State’s fiscal policy dictates whether there is a need to borrow or not:

• Each year Parliament approves the State Budget, which includes budgeted revenues, expenditures (including investments) and financial transactions.

• The Ministry of Finance prepares a cash flow forecast based on the approved State Budget. The cash flow forecast shows if there are any borrowing needs.

Debt obligations may be assumed in the form of loans, bonds, overdraft facilities or repo transactions, either domestically or internationally. The maximum term for long-term debt is 50 years.

Generally, borrowing needs stem from the need to fund budget deficits or to refinance maturing debt obligations. When there is a borrowing need, the State Treasury evaluates different borrowing options. The choice between taking a loan or issuing bonds depends, among other things, on the size of the funding gap, repayment schedules, ‘all-in’ costs, and associated financial risks (refinancing risk, interest rate risk). The State Treasury department also manages the financial risks associated with the State’s debt obligations (please see the section on financial risk management).