Foreign loans for completing unfinished constructions

The Government is considering granting foreign loans guaranteed by the state to the economic entities that want to complete the construction works on unfinished apartment buildings. An assessment of all the buildings under construction in Chisinau, Balti and Cahul showed that a sum of 3.5 billion lei is needed to finish them, Info-Prim Neo reports. According to the Ministry of Economy and Trade, about 2 billion lei is needed to complete the construction of half-erected buildings, while 1.5 billion lei – for buildings that are 75% ready. The Ministry said that the Government could guarantee the foreign loans taken out by construction companies to finish these blocks. Presently, the Ministry of Economy and the Ministry of Finance are negotiating such loans with the Government of Japan, certain banks and international funds that expressed their readiness to provide loans repayable in 35-40 years at lower interest. A condition for getting such guaranteed loans is that the beneficiary economic entities should for their part finance from this money the construction of homes by mortgage offered to the population for at least 20-30 years. The Ministry of Economy considers that this will stimulate demand on the market as the low demand is now the major problem faced by the construction sector. This affects not only the construction companies, but also the companies that make construction materials and companies working in other related areas. The Ministry considers that it is not a good solution for the state to purchase these unfinished constructions as it turned out to be a less efficient owner compared with the private owners. Besides, the relations of ownership over such buildings are very complicated. It was ascertained that some of the construction companies took money for the apartments from the people and purchased land (whose price is on the rise) and now do not have money to finish the constructions and give the people the apartments they paid for. Minister of Construction and Territorial Development Vladimir Baldovici said that there are 2000 unfinished buildings in the country and only 30% of the economic entities working in the construction sector expressed willingness to take out foreign loans guaranteed by the state. “We are discussing the issue with employers from the construction sector and with representatives of trade unions. But some of the builders want to sell the finished apartments at the same price as earlier and cope on their own, without loans. The demand for apartments and the number of realty transactions decreased, but the price of a square meter of apartment in Moldova is higher than in Kiev, Odessa or Bucharest. It is like the price in the most expensive cities in Europe,” Baldovici said. He added that the Deputy Minister of Construction and Territorial Development and the central bank governor recently had a meeting with managers of construction companies. The managers were informed about the possibility of getting loans from banks from the sum of 650 million lei allocated by the central bank for lending to the real sector of the economy. The interest rate is 9% (the refinance rate of the central bank) plus the margin of 5% that the banks can apply.