Yesterday, the National Bank increased the prime rate for the tenth time in the last year. It reached 21.5%, which is 8 times higher than at the end of 2020 (Sandu took office as president), when the prime rate was only 2.65%.
Former president Igor Dodon commented on it on his social media, reports aif.md.
“The purpose of raising the prime rate, according to the NBM and the government, is to fight inflation. In our opinion, it is absurd, because inflation in Moldova is not of monetary origin. Inflation in Moldova is exclusively due to the government’s inability to manage domestic affairs and negotiate with foreign partners. The price of almost USD 1500 per thousand m3 of natural gas is not of monetary origin.
It is the result of the government’s short-sighted and irresponsible policy. That is why the National Bank’s policy to reduce inflation cannot reduce it by one percent; the effect is completely different. An increase in the prime rate has already led to an increase in interest rates on loans, which makes it difficult for people to repay loans on time. Furthermore, the government’s budget expenditures to access and service loans in the domestic banking market will increase severely.
If 3 months ago only 11.2% of loans were not timely repaid, now this figure has reached 16.5%, with clear upward trends. At present, the population has problems with timely repayment of loans worth 4 billion lei, which is 1.5 billion lei more than six months ago,” Dodon wrote.
He noted that economic agents’ position was unenviable, and now it has become even worse. Almost half of all loans taken by economic agents cannot be repaid on time. We are talking about 17.1 billion lei, which is 48.4% of all loans granted.
Thus, the tightening of the monetary policy does in any way reduce inflation, but the total amount of credits with delayed payments increased significantly. The figure reached 21.2 billion lei – 4.5 billion more in just six months.
“We have the whole month of August is ahead of us, when farmers will have to pay the loans taken out to buy equipment. With a poor harvest and a significant increase in interest rates, we predict an even greater increase of loans that will not be repaid on time. As we said earlier, the legislation must be changed urgently, the current NBM staff must be dismissed and the central bank must be returned to protect and support the national economy, putting an end to blind activity according to a theoretical methodology imposed from outside,” Dodon stressed.