Expert-Grup

Authorities must review the incentive mechanisms for healthy lending in Moldova's economy

Thursday, 13 April 20175890 views
Authorities must review the incentive mechanisms for healthy lending in Moldova's economy

Automatically translated summary. The full article is available in Romanian.

At a press conference in Chișinău on 13 April, the Independent Think Tank “Expert-Grup” called for comprehensive policies to overcome the crisis of confidence between banks and the real economy and to revive bank lending. It presented three policy documents proposing ways to widen firms' access to bank credit.

According to the latest data (February 2017 versus February 2016), the stock of loans fell by more than MDL 3 billion, while non-performing loans rose by about MDL 2 billion. Meanwhile, the banking sector holds excess liquidity of around MDL 7 billion. The experts propose three directions: cheaper and longer-term financing with new instruments, reducing non-performing loan portfolios, and improving the legal and procedural framework for banking and lending.

For the short term, they recommend trade finance instruments such as bills of exchange, factoring and letters of credit. For long-term investment, they advise issuing long-term government securities; their average weighted maturity is 6.5 months, against 29 months for new loans issued in 2016. They also urge stronger sanctions for banks in line with Basel III, and say the Government, the National Financial Market Commission and the National Bank of Moldova must act together.

View the original article in Romanian