President Igor Dodon’s initiative concerning the directing of a part of the National Bank of Moldova’s profit to the state budget for partially covering the state debt formed as a result of the coming into force of the “billion law” encroaches upon the NBM’s independence, compromises the efforts to capitalize the institution and is not a viable solution to the problem of the state debt generated by the bank fraud, stated the Independent Think Tank “Expert-Grup”.
According to “Expert-Grup”, the payment of a part of the state debt by transferring a part of the central bank’s profit to the state budget at a time when the bank’s capitalization level is reduced is similar to the transfer of money from one pocket to another without solving the core of the problem that is the lack of real and visible progress in investigating the bank theft and recovering the stolen funds.
“This initiative can be described rather as an attempt to hide the lack of real progress in solving the fundamental problem. The stolen money wasn’t recovered and it is not clear who is to blame, while the citizens continue to pay for the public institutions’ failure to prevent the given frauds,” says the think tank’s comment that is quoted by IPN.
“Expert-Grup” noted that the burden related to the bank fraud is actually shifted partially onto the NBM. This directly affects the capitalization level of the central bank and can undermine the institution’s independence. The NBM enjoys an adequate level of independence and of the foreign exchange reserves, which is currently the main pillar of the macro-financial stability. However, the capitalization level remains insufficient. The practice of directing the NBM’s profit to the state budget is detrimental to the independence of the monetary authority.
“The initiative actually does not allow achieving the declared objective of identifying additional financial resources for alleviating the bank theft’s burden borne by the state budget. The sum of 6 billion lei announced by the President is much higher than the NBM’s profit. In 2019, the profit could be lower owing to the particularities of the monetary policy.”
In this connection, “Expert-Grup” underlined that the politicians should center on the essence of the problem and should stop infringing on the independence of the monetary authority. Undermining the NBM’s capitalization cannot be a solution in this regard as this implies long-term risks to the macro-financial stability in the country. Instead, the efforts should be really stepped up to investigate the bank fraud and recover the stolen funds.
