In 2020, Moldova was impacted by the global pandemic1 and experienced one of the most severe droughts in the past two decades, both of which have exacerbated the economic downturn. [...] Under the assumptions of a successful containment of the pandemic, a broad-based reforms program by the new government, and sustained fiscal impulse to the economy, growth is expected to continue in the medium term above potential. [...] On the back of strong domestic demand, and quick expansion of imports, the current account deficit reached almost 15 percent of GDP in the first half of 2021 and was mainly financed by cash and deposits and to a lesser extent by public debt instruments. [...] Private credit to GDP was a mere 27.8 percent in 2020, compared to 31.0 percent in 2014 and an average of 56.5 percent in the Europe & Central Asia region, excluding high income countries.11 Business credit demand is constrained by the relatively low number of firms and low share of large firms, as well as a high share of foreign-owned firms, and the use of non-bank financing sources. [...] The capital adequacy ratio of the banking sector, as measured by the share of regulatory capital in risk-weighted assets, stood at 26.6 percent as of June 2021, partly explained by the measures introduced by NBM aiming to relax the capital buffers requirements for banks.
Authors
- Disclosure Date
- 2021/11/11
- Disclosure Status
- Disclosed
- Doc Name
- Concept Project Information Document (PID) - Moldova MSME Competitiveness Project - P177895
- Originating Unit
- MCT Advisory Services (CMEA1)
- Published in
- United States of America
- Rel Proj ID
- MD-Moldova Msme Competitiveness Project -- P177895
- Total Volume(s)
- 1
- Unit Owning
- EFI-ECA-FCI-Finance-2
- Volume No
- 1