This May, the banks operating in the Republic of Moldova, after the crisis of 2014 caused by the bank fraud, managed to reach again the historical high of released loans of October 2014. The volume of granted loans amounted to 47.9 billion lei, as opposed to 48 billion lei in October 2014. The loans released in the whole banking system, which includes the nonbanking system, so far came to almost 59 billion lei. But the value of the leu is yet different now, said expert of the Institute for Development send Social Initiatives “Viitorul” Veaceslav Ioniță. The real situation of 2014, when the loans in the banking system represented 37% of the GDP, will be reached in two-three years in the best case, IPN reports.
In the program “Economic analyses with Veaceslav Ioniță”, the economist said that after 2014, during three years and a half, the volume of released loans declined continuously on account of business entities, by almost 18 billion lei. The loans provided to legal entities now increased in volume slightly, but didn’t compensate for the serious decline in the volume of loans released to business entities. After February 2018, of the 15.8 billion lei that represented the rise in the bank loan portfolio during three years and a half, 10 billion lei were provided to private individuals, while 5.8 billion lei to legal entities.
According to the economist, after the crisis of 2014 that affected the banking sector, the nonbanking sector had the opportunity of growing by taking over the market share from banks. In 2019, this sector grew by 20%, three times more than its assets. In 2020 yet, the banks managed to recover a part of the lost market share. The increase in the volume of loans witnessed in 2020 is due only to the banking sector as the mortgages in the period increased in volume. One in 5 lei offered by banks in 2020 was provided to a building company or to a private individual for taking out mortgage.
After the crisis of 2014, the people lost trust in the banking sector and the most considerable lending in foreign currency followed. However, since 2018 until now, the loans in foreign currency came to 13.9 billion lei and the rise witnessed during three years and a half was due to the rise in loans provided in Moldovan lei. The interest rate is low, the currency risk is not very high and the Moldovan lei this way became the circulating currency in the Republic of Moldova, while the economic activity in the country focuses on the leu.
Currently, private individuals’ indebtedness represents 12.4% of the GDP, which is three times more than ten years ago. The European average is 56%, while the regional one varies between 16% and 18%. The indebtedness rate in Moldova is this way almost five times lower than the European average and by 50% lower than the regional average.
