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World Bank lends Moldova $45 mln to boost transparency in business, banking

World Bank lends Moldova $45 mln to boost transparency in business, banking Author: D.F. Shapinsky License: Creative Commons.

CHISINAU (Moldova), December 19 (SeeNews) - The World Bank said it is lending Moldova $45 million (43 million euro) for increased transparency in the business and banking sectors and for more efficiency in public spending.

The loan is part of the Second Development Policy Operation (DPO-2)for Moldova and aims to help Moldova to make business regulation more transparent and less burdensome, improve bank regulation and supervision and to spend public money more efficiently, the World Bank said in a press release on Friday.

This operation follows First Development Policy Operation approved in March 2014. The current operation is a key component of the Moldova Country Partnership Strategy for 2014-2017 and supports the government's National Development Strategy 2020, the financial institution added.

Moldova has been trying to cope with a major banking crisis since November 2014, when about $1 billion went missing from three of the country's banks. The sum was equal to about 16% of the impoverished ex-Soviet state's 2015 gross domestic product. The banks - Banca de Economii, Banca Sociala and Unibank - collapsed and were liquidated.

The approval of DPO 2 has taken into account actions taken by Moldova's central bank (BNM) and by the government following this fraud, the World Bank said.

The bank supported the withdrawal of the licences of the three troubled banks, diagnostic audits of other large banks and measures to strengthen bank regulation and supervision. Also, it has worked closely with the IMF on recommendations to improve governance in the financial sector.

"The approval of this financing is an acknowledgement of Moldova's recent achievements, especially in the banking sector and the affirmation of macroeconomic stability. Our budget support is about removing private interests from public economic institutions, because that is what businesses need to create jobs for ordinary Moldovans," World Bank Country Manager for Moldova, Alex Kremer, said in the press release.

The DPO 2 supports a number of important structural reforms improving financial sector stability, promoting transparency and refining the management of public investments, through making investment subsidies in agriculture more efficient and equitable, and improving coverage of well-targeted social assistance programs.

"This financing is an important benchmark for the Moldovan Government and we are looking forward to continue our cooperation in advancing structural reforms and addressing issues which constrain growth and job-creation, It is vital to use the momentum and move fast and firm in implementation of crucial reforms," task team leader of the DPO series, Ruslan Piontkivsky, said.

Since Moldova joined the World Bank Group in 1992, over $1 billion has been allocated to approximately 60 projects in the country. Currently, the World Bank portfolio includes 9 active projects with a total commitment of $356.1 million. Areas of support include regulatory reform and business development, education, social assistance, e-governance, healthcare, agriculture, local roads, environment, and more.

The International Finance Corporation's committed portfolio in Moldova is $56.3 million, while its committed portfolio consists of 78% loans and 22% equity and quasi-equity. The Multilateral Investment Guarantee Agency has provided guarantees totaling $95 million. Both institutions are members of the World Bank Group.

($= 0.9569 euro)