(Bloomberg) -- Hungary’s debt servicing payments doubled through the third quarter of last year, putting the nation on track to surge past Italy for the highest level in the European Union in 2023.

Interest payments ballooned to 2.5 trillion forint ($7.1 billion) in the January-September period, twice as much as in the same period in 2022, the Budapest-based statistics office said on Wednesday. Last month, the central bank estimated that debt servicing costs increased to 4.3% of the country’s economic output for the full year in 2023 and may only marginally drop to 4.2% this year, the worst in the EU.

Hungary became one of the year’s first emerging-market sovereigns on Wednesday to sell dollar-bonds to meet rising financing needs. The eastern European nation has ramped up borrowing last year to cover missing EU funds, which had been suspended due to graft and rule-of-law concerns under Prime Minister Viktor Orban’s rule.

With EU funds in a limbo, Hungary last year raised forint issuance, paying a hefty premium on inflation-linked retail bonds, especially as consumer price-growth last year averaged just below 18%, according to central bank estimates.

The bigger interest payments, while a burden for the government, will translate into higher interest income for Hungarians, spurring a recovery in domestic consumption after a recession in 2023, Economy Minister Marton Nagy wrote in an op-ed on Index news website on Wednesday.

That’s also raised the country’s financing needs. Hungary was selling $2.5 billion in 12-year dollar bonds on Wednesday, at about 180 basis points over US treasuries, according to a personal familiar with the matter. 

The country had targeted selling as much as $2 billion in foreign-currency bonds in the first quarter, in addition to almost €1 billion ($1.1 billion) in green euro bonds.

(Updates with size of bond sale in sixth pargraph.)

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