Economic Policies on July 16–31, 2011

Banking system

Improving condition of bank sector on background of sensitive differences between banks…

According to banking statistics and media reports, just one out of five commercial banks in Moldova, which reported losses for 2010 was suffering losses on June 30, 2011. The highest net income recorded by a commercial bank in 2010 — about 260 million lei — dropped down to 151 million lei in the 1^st half of this year, and this result was recorded by the same bank, Moldova-Agroindbank. However, this bank is capable to exceed the net income for 2010 till the end of this year.

Eximbank, BCR Chisinau, ProCreditBank, Universalbank and FinComBank are the five banks which reported losses for 2010. As of June 30, 2011, all these banks except for one of them have recovered and reported profit. Universalbank is suffering losses so far, being the only bank in Moldova which reported losses, as of June 30, 2011. Surveys by research centresRO provide a deeper description of condition of commercial banks from perspective of some performance, efficiency, solvency indicators, etc. Moldova-Agroindbank (MAIB) reported the highest profit of about 260 million lei for 2010. The net income of this bank for the first half of 2011 exceeded 151 million lei, according to accounts releasedRO on the official website of the bank. Victoriabank (VB) and Moldindconbank (MICB) reported an income of 78 million lei and more than 55 million lei respectively, and are part of the Top-3 banks with highest revenues along with MAIB, as of June 30, 2011.

However, experts note that the net income is not an absolute indicator and it does not reveal the efficiency of a bank to a certainty, so that it should be compared with other indicators. According to a bank efficiency rating worked out by the rating and estimation agency Estimator-VM for the 1^st quarter of 2011, MAIB, VB, BCR Chisinau, MICB and Banca Sociala were part of the Top-5 efficient banks in Moldova. To note that Eximbank reported a higher net income than BCR and Banca Sociala did, but it was not included in the bank efficiency top. A deeper report concerning the banking performance ratingRO was released by independent think-tank Expert-Grup.

On the other hand, the international financial magazine Euromoney rated Moldova-Agroindbank as the No.1 bank in Moldova. The bank was rated on the basis of several indicators such as dimension, return, customer care, market share of credits and deposits, profitableness, capitalisation, retailing and corporate segment, project financing, risk management, cost-income relation.

Public funds

Execution of various components of the budget…

According to accounts by the Ministry of Finance for the first half of 2011, the execution of national public budget issued a deficit of about 1.36 billion lei. Deficits were reported for three components of the national public budget: state budget, social insurance budget, and budget of administrative territorial units. The mandatory health insurance fund was the only one to achieve a surplus of resources.

Incomes worth 8.12 billion lei were collected to the state budget in the first half of this year, by 8 percent more than in the similar period of last year, but by one percent less than planned. State budget expenses amounted to about 9.27 billion lei, by nearly 8 percent more than in the similar period of 2010, and covered 86.5 percent of the planned expenses.

Incomes worth 3.75 billion lei went to budgets of administrative territorial units, by 0.4 percent more than planned. Expenses from these budgets exceeded 3.9 billion lei, which covers about 75 percent of expenses foreseen for the first half-year. Incomes to the state social insurance budget exceeded 4.4 billion lei, which is by 0.8 percent more than foreseen for the first half-year. Expenses from this budget accounted for 4.6 billion lei and were executed 99.1 percent of the planned amount.

Thus, the execution of the state budget for the first half-year issued a deficit of 1.14 billion lei, social insurance budget had a deficit of 188.2 million lei, and the budget of territorial administrative units issued a deficit of about 180 million lei. The mandatory health insurance fund was the only component of the national public budget to achieve a surplus (151 million lei).

External position of country

Debts are on the rise…

Data released by the National Bank of Moldova and Ministry of Finance reveal that the state debt of Moldova amounted to about 19 billion lei (1.7 billion dollars) on June 30, 2011, of which the foreign state debt accounted for 13.66 billion lei or about 70 percent and the internal state debt amounted to 5.37 billion lei. The external state debt increased by about 57 million lei this year and the internal debt rose by 64 million lei, according to the Ministry of Finance.

More than 527 million lei went to the foreign state debt service in the first six months of this year, of which 442 million lei to reimburse the basic amount. An amount of 210 million lei went to the internal state debt service in the first half-year. Minister of finance had earlier assured that Moldova’s internal state debt would not exceed 5.6 billion lei and the foreign debt would account for about 1.2 billion dollars in 2011.

e-democracy.md