Hungary’s debt service payments doubled in the first three quarters of last year, putting the neighboring country on a trajectory to put it ahead of Italy and the highest in the European Union by 2023, Bloomberg reports.

Interest payments rose to 2.5 trillion forints ($7.1 billion) in January-September 2023, twice as much as in the same period in 2022, Hungary’s National Statistics Institute said on Wednesday, Bloomberg reported, citing Agerpres.

Last month, the National Bank of Hungary also estimated that for the whole of 2023, debt service costs would rise to 4.3% of gross domestic product, and could only fall to 4.2% of GDP in 2024, the highest level in the EU.

On Wednesday, Hungary became one of the first emerging economies to sell dollar-denominated bonds due in 2024 to cover its financing needs. The eastern European country increased loans last year to cover a shortfall in European funds that has been stalled by disputes with Brussels over the rule of law.

With European funds uncertain, Hungary decided to increase its forint-denominated bond issuance last year, offering a significant premium to retail investors, especially given that consumer price inflation averaged almost 18% last year.

Even if they are a burden for the government, higher interest payments will lead to more interest income for Hungarian citizens, which will stimulate the recovery of domestic consumption after the recession in 2023, Economy Minister Marton Nagy said in an editorial published on Wednesday on the Index news portal.

However, in parallel, Hungary’s financing needs have also increased. According to a source cited by Bloomberg, Hungary will issue dollar bonds with a maturity of 12 years on Wednesday. Last month, the director of the Debt Management Agency, Zoltan Kuraly, announced that Hungary intends to sell up to two billion dollars worth of foreign currency bonds in the first quarter of 2024, in addition to green bonds worth almost one billion euros.