Expert-Grup

Expert-Grup proposes a reform of the government securities market that would cut debt servicing costs and mobilise resources for infrastructure projects

Tuesday, 13 June 20176136 views
Expert-Grup proposes a reform of the government securities market that would cut debt servicing costs and mobilise resources for infrastructure projects

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

The Independent Think Tank “Expert-Grup” has presented, at a public event, a concept for reforming Moldova's government securities market. The proposal aims to reduce the cost of servicing public debt and to mobilise resources for infrastructure projects, by reducing the dominance of commercial banks in the market.

Banks hold 78% of the securities issued by the Ministry of Finance and earn profits about 200 times higher than all other capital market participants combined. The Government lost at least MDL 600 million in 2015-2016 because of the market's inefficiency. Other obstacles include short maturities, banks' exclusive right to the primary market, no secondary-market trading infrastructure, a narrow base of institutional investors, difficult access for investors and low financial literacy.

The experts name four conditions for a modern market: free and direct investor access, a single market, immediate secondary trading and fiscal fairness. They recommend making market development a priority of the national financial market strategy, widening the range of investors, removing preferential tax provisions, adopting modern trading technology, calibrating National Bank of Moldova Certificates and improving financial education.

View the original article in Romanian