Moldovan experts say converting of emergency loans imposed decision, problems in adoption not avoided

Chisinau, 4 October /MOLDPRES/ - The government was obliged by the situation and commitments to assume responsibility for the law seeing the converting of the guarantees, provided in 2014 and 2015, for loans of the National Bank of Moldova (BNM), Banca Sociala (Social Bank) and Unibank. Yet, there were also problems at the adoption of the concerned decision. This is the conclusion reached by the initiative group for emergency reforms, set up by the Expert Grup Independent Analytical Centre.    

“At the first blush, the concerned measure deals only with the fulfillment of the legal provisions, according to which, if the beneficiary of the loans is not able to return the debt, it will be transposed to the state budget. Thus, in the context of the bankruptcy of the three banks, the guarantee turns into state debt, with the corresponding fiscal implications,” reads an opinion note by Expert Grup, issued today.    

According to experts, besides the carrying out of the legal provisions, “the government resorted to this measure for two important reasons. First of all, in order to avoid another blow to image as a result of the failure to fulfill the payment obligations before BNM, which would compromise also the march of negotiations with IMF on a potential financing memorandum. Secondly, this measure ensured the protection of BNM’s independence, given that, if the government did not ensure the converting, the BNM’s reserve fund would have become debit, which, according to the BNM’s Law, would oblige the state, in the person of the Finance Ministry, to transfer the left sum to BNM.”     

Nevertheless, although there were constraints, both of the government and BNM, “it is surprising the fact that a decision with such pronounced budgetary effects (increase in the state debt by about 37 per cent up to the value of 51 billion lei) was adopted with the serious violation of the basic provisions of transparency in the decision-taking process.” According to them, “the decision was taken against a background of modest progress in remedying the consequences of the bank fraud, converting of the guarantees issued by the government into state bonds entails also an increased moral risk, as the effective interest of five percent on the bonds issued for a 25-year period, has no economic justification and is eventually an act of obvious social injustice.”   

According to the draft on the converting of the emergency loans into state debt, state bonds amounting to up to 13.583 million lei are scheduled to be issued for a period of up to 25 years, at an effective interest rate of five per cent. The bonds will be transmitted to the National Bank of Moldova.  

Officials say the money stolen from the banking system will be recovered in one or two years and there are no reasons for concern for the residents that they will pay the debts to BNM during 25 years. A preliminary report by the Kroll Company shows that an important sum of the money stolen from the banking system has been localized; besides, assets of the banks under liquidation are to be sold.    

(Reporter V. Bercu, editor A. Raileanu)