Economic Policies on February 23 – March 14, 2004

Banking and insurance

Crediting policy

Dropping interest rates on credits granted to agricultural producers from 22% to 25% will soon be on Government agenda. According to Prime Minister, albeit the financial and banking system was merely in private hands, Ministry of Finance would come up with additional mechanism to simplify the pawn system and drop the interest rates on contractual credits.

Guaranteeing bank deposits

The Law on Guaranteeing Bank Deposits of natural entities is yet another law regulating the banking system. This mechanism of protecting the deposits has become operational once it was possible to reach a consolidation and stabilisation of the banking institutions.

The law was developed in line with generally accepted standards as provided in European Union Directive 94/19/EC of 30th May 1994, requirements of the International Monetary Fund, and those of the International Association of Deposit Insurance. Under the law all the banks are obliged to participate in the scheme of guaranteeing deposits via a special fund, to which they’ll allocate funds on a quarterly basis. The fund would have a bank account at the National Bank to accrue funds for compensating inaccessible deposits. The fund would be equal to at least 7% of the total of guaranteed bank deposits.

Given that the great majority (around 97%) of depositors (natural entities) hold deposits of less than 4,500 Lei, the law provides for a ceiling of guaranteed deposits equal to that amount. In case the deposit exceeds that amount, the fund may apply a variable ratio to the aforesaid ceiling so as to adjust deposit payments to the amount available.

Moldova in the world

International aid

World Bank would grant financial assistance to the Republic of Moldova even if the latter does not have a conditional agreement with IMF. The aid would go to social projects as well as to boost private sector. The amount as well as the means of payment shall be established as part of the new Country Assistance Strategy for years 2004–2007. The decision was taken in consultation with Chisinau and is to be presented to the WB Board of Directors.

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