Difficult to re-launch investments: analysts

Regardless of the political structure of the new government, after the July 29 poll, it will cope with a sharp fall in investments. “There is no economic tool to allow for a rapid re-launch of investments,” Valeriu Prohnitchi, the director of the Expert-Grup think tank told a news conference on June 30. “Most recently, the key investment source was the companies' own investments. However now most of them are in a very bad economy state and it is the case for the state budget to finance certain investment projects, but its own incomes have dropped dramatically and keep doing so,” Prohnitchi said. Speaking about direct foreign investments, Expert-Grup's analyst says they won't come to Moldova until the political crisis is over and and it becomes clear what forces will come to power. The direct foreign investments dwindled in the wake of the world financial crisis. The investors expect more attractive conditions for their money and positive signs that the economy is bettering. But there are no positive signals from Moldova so far. One more negative signal adds to the internal political crisis: the breach of the relations with the IMF, Expert-Grup's director points out. “There could be one more possibility to relaunch the investments: the bank loans, but something special must happen in the banking sector for that, like cheaper loans,” the economist says. In its publication “Realitatea economica”, Expert-Grup writes that the central bank started giving loans for the first time in 10 years. It gave banks 650 million lei. The National Bank's key condition is that the commercial banks should start re-crediting the real sector, with a maximum interest of 5% over the central bank's margin. “Since the loans granted by the Moldovan banks in May fell thrice compared to May 2008 and 20.7% month on month, re-launching the real sector of the economy at relatively advantageous rates (about 14-15%) is really important. But we think there should be a regulation endorsed by the National Bank's board stipulating crediting conditions and criteria of selecting the banks. Thus, the shortage of transparency may hit the competitive environment from the country and the efficiency of re-crediting sources,” Victor Prohnitchi concluded.