BANKS GRADUALLY REGAINING THEIR POSITION IN MOLDOVAN ECONOMY AFTER CRISIS - EXPERTS

After three year anemia, commercial banks are gradually returning to fulfillment of their basic mediator functions against the background of decline in interest rates, the demand for credits is growing both from the side of individuals and from legal persons, say Expert-Grup analyst.

Presenting their annual report "MEGA", they said that due to this, the monthly average volume of new credits accounted for 2.3 billion lei during 2018, which is 300 million more than the equivalent rate of the previous year.

"The population crediting is mostly due to the consumption growth, including the growth in the number of citizens who have the right to participate in the state program Prima Casa. The preserving of such a trend will allow banks to improve their credit portfolio. It is also encouraging that for the first time after the 2014-2015 crisis the volume of the issued credits exceeded the sum of returned loans. Thus, by the end of the 3Q2018, the total volume of issued credits grew 2.2%, accounting for 34.6 billion lei", experts said.

However, they pointed that the growth of crediting usually is not connected with the real sector of economy, but is first of all due to mortgage credits (37%) and consumption credits (23%).

"Parliamentary elections set for the beginning of the next year and the possible aggravation of the dialog with partners in case of their incorrect holding may raise the volatility and ambiguity at the financial market. First of all, such a situation may influence the growth of interest rates on credits and government securities, which in its turn will lead to reduction of demand for credits, that is the lowering of the economic activity", experts said.

According to them, the introduction of a single rate of tax on income and lowering of the social burden on business implies the growth of economic agents' own funds, which may be directed to investment, which may also reduce the demand for bank crediting.

"Besides, due to lack of clear results in the investigation of the stealing of the billion from the banking system, external partners are still suspicious about Moldovan authorities and their statements about measures, undertaken for returning the money to the banking system. This fact will also not help improving the stability in the Moldovan banking system and the economy in general", experts say.