A new report from Bloomberg on Tuesday revealed that so far this year, countries in Eastern Europe have borrowed $32 billion, an increase of 300% over the same period last year.

Poland has borrowed nearly $9 billion from overseas markets, placing it in second place among emerging market economies when measured by overseas borrowing, with only Saudi Arabia ahead of it.

Romania and Hungary, having borrowed $6 billion and $5 billion respectively, are the fourth and fifth largest borrowers among emerging market economies. It is the first time in 12 years that there are three Eastern European countries in the top five borrowers among emerging market economies.

The borrowing surge is being attributed to the still raging energy crisis forcing governments to issue subsidies to the public, as well as increased spending due to the threats arising from the nearby military conflict raging in Ukraine, according to Bloomberg’s analysis. Eastern European countries are both fortifying their military capabilities, and attempting to deal with waves of refugees fleeing the conflict zone.

At the same time, central banks have implemented more hawkish monetary policies, which have made it much more expensive to borrow in the bond markets, even despite a nation’s high rating. Currently a new 30-year bond from Poland is paying 5.5% in annual interest, which is far above the rate the bond would have sold for three years ago.

Eastern Europe’s rapidly growing budget deficits are projected to be hit hit hard by rising interest rates, which will inevitably further pressure the region’s finances.

Bloomberg’s analysts estimate that in 2023, Eastern Europe’s budget deficit will grow to 4.3% of the region’s gross domestic product. Two years ago it was 1.3%.

In an interview with Bloomberg, Daniel Wood, a fixed income portfolio manager at William Blair International said that the war in Ukraine “hits fiscal deficits from both sides. It lowers growth, which reduces revenue collection for the government, and on the expenditure side it has been necessary for governments to help those that have been hit hard by the cost of living.”