World Bank expert says guarantees' converting into state debt only logical step of decisions taken in 2014, 2015

Chisinau, 5 October /MOLDPRES/ - The World Bank supports, in essence, the package of laws for which the government took responsibility, and the converting into state debt of the guarantees offered by the cabinet for the emergency loans provided by the National Bank to the three bankrupt banks “was the only logical step of the decisions taken in 2014 and 2015.” A senior economist at the World Bank, Ruslan Piontkivsky, made statements to this effect at a news conference today.  

“If you undermine your own guarantee, then you cannot expect other countries or someone else ever trust you,” the expert noted. Piontkivsky emphasized that the present government and the Finance Ministry had no choice but to carry out the guarantees, as they were the conditions of the agreement on guaranteeing the emergency loans.    

Ruslan Piontkivsky also said that this guarantee had been issued almost two years ago and the question should be if there was possible or not to prevent the bank fraud or to reduce the damage inflicted; “yet, once the guarantee issued, there is no other way in which the government or Finance Ministry could have avoided its  converting into debt.”

“If the fraud was discovered one year earlier, the guarantee would have been lower and it was not needed at all. The question is what happened before and not what happened after the guarantee was provided,” the economist stressed.   

The laws for which the government took responsibility meet the previous agreements with IMF and were passed, “in order to strengthen the macroeconomic stability and the banking sector’s resistance, to improve the situation and reduce risks and to upgrade the competences of the regulatory body.”  

“For us, the signing of an agreement on financing between Moldova and IMF represents an important criterion, and the authorities know this and we know they  count on our financial support of 45 million dollars, which has already been included in the budget. If there is a delay in the discussions with IMF for any reason, then it might happen that it will not be possible to finalize the procedure this calendar year,” the World Bank economist said.  

On 26 September, the government ruled to take responsibility before parliament for seven laws. The package comprises laws on banks’ recovery and resolution, the central securities depository, the issuance of securities to offset the guarantees offered by the state in 2014 and 2015 for the loans provided by BNM to the three banks declared bankrupt, the drafts on amendment on the state budget law, law on the state social insurances budget, laws on health care funds.  

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

(Reporter V. Bercu, editor A. Raileanu)