The debt of the Republic of Moldova is 272.5 billion lei. External debt 169 billion lei, and internal debt – 103.5 billion lei – Ziarul de Garda
The debt of the Republic of Moldova is 272.5 billion lei or 14.8 billion dollars. That of foreign countries 169 billion lei or 9.2 billion dollars: of which 2.7 billion dollars is given by the Government, the National Bank of Moldova, local public administrations and state-owned enterprises; and $ 6.5 billion – for private companies. Today, the internal debt is estimated at 103.5 billion lei or 5.6 billion dollars, supports the IDIS Viitorul expert, Veaceslav Ioniță.
“Even if the foreign loans 2/3 of the loans of the Government of the Republic of Moldova, the interest paid is four times lower than the domestic loans. Currently, the foreign loans accessed by the Government of 47 billion lei, and you get to pay in 2022 to be 590 million lei. The internal loans of the Government are of 32 billion lei, and the interest will be of at least 2.5 billion lei ”, Ioniță claims.
According to the expert, the debt of the Government of the Republic of Moldova in the first quarter of 2022 approached 79 billion lei: of which foreign debt – 46.7; and the internal ones – 32.2. In general, in the history of the Republic of Moldova, the debts of the Government have experienced a significant leap twice: 1) between 2015 and 2016; and 2) from 2020 to the present. The domestic debt increased to 9.7 billion lei in 2015 to 21.5 billion lei in 2016. Due to the bank robbery, government guarantees were granted, which were transformed into state debts. The external state debt increased from 2015 to 2016 from 26.5 billion lei to 29.3 billion lei, largely due to the depreciation of the Moldovan leu. Thus, the state debt reached 50.8 billion lei in 2016 from 36.2 billion lei in 2015. Then followed a stability until 2019, determined by two factors: 1) the leu strengthened as a result the external debt in dollars increased, the lei remained unchanged and 2) in this activity the Government did not borrow much.
Veaceslav Ioniță also said that the years 2020, 2021 and 2022 were the most critical in the country’s history regarding debts. In 2020, the year of the pandemic, Moldova entered a severe economic crisis, which required money, and the IMF provided loans to meet budget needs, primarily pensions and salaries. The energy crisis came in 2021, and the Republic of Moldova was forced to borrow again. During this period, the Republic of Moldova increased from 53 billion lei in 2020 to 79 billion lei in the first quarter of 2022. Of which: 17.5 – external loans and 8.7 – internal loans.
The economist states that 2/3 of all the debts of the Republic of Moldova, of 14.8 billion dollars today, are external and 1/3 – internal. Internal debts: 1/3 are of the Government, and 2/3 – of the economic agents and of the population. Of the $ 14.8 billion – 4.5 is for public authorities and 10.3 for private entities. However, in terms of domestic debt, Moldovan citizens still have about 10 billion lei borrowed from other individuals, which are not reflected anywhere. And the economic money, in addition to the debts they owe to financial institutions, still have tens of billions of lei in debts to employees, suppliers, other economic money. “For this reason, the total volume of indebtedness of the Republic of Moldova internally is much higher. It is estimated at 272.5 billion lei or 14.8 billion dollars, which is only compared to financial institutions. But in reality they are much bigger “, said the economist.
The economic analyst specified that in the current debt of the Government of the Republic of Moldova has 32% of the Gross Domestic Product (GDP). The record was in 1998, almost 83%. After that, there was a decrease until 2008, and since then it has remained at the level of 30% -32%. Speaking about the countries in Europe, which have large debts, relative to GDP, the analyst said that it is Greece – with 206%; in second place is Italy with 156%, followed by Portugal with 134% and Spain with 119%. The average in the euro area is 98%, in the EU it is 91%. In Ukraine, 61%, and in Romania – 47%. “Moldova has almost the lowest debt to GDP ratio in Europe – about 32%. The government, even if in the last three years it has borrowed five times more than in any other life since independence, the debt is the lowest in Europe “, mentioned the economic analyst.
The expert also spoke about the inflows of external financial resources in the state budget from 2001 to the present. Thus, most came in the state budget between 2011 and 2015 – 1.2 billion dollars, of which 830 million were in the form of grants and 390 million – loans. Between 2016 and 2020 – external grants and loans did not come much, and the emphasis was more on domestic loans. In 2021 and 2022, external grants and loans are much higher than in previous years.
Regarding the interest on loans taken by the Government, Veaceslav Ioniță noted that by 2018 the Republic of Moldova annually paid 1.5 billion lei from the state budget in the form of interest on loans taken. This year, he will pay 2.9 billion lei. But it could be so much more. If last year the government borrowed 5.5% in the domestic market, now it has to borrow 17%. Thus, the payment of interest would be 3.2 or 3.3 billion lei this year.
According to the economist, although the credits of external payments 2/3 of the loans of the Republic of Moldova, the interest rate is four times lower than for domestic loans. Currently, the external loans accessed 47 billion lei, and you get to pay this year is 590 million lei. Domestic loans are 32 billion lei, and you get paid to be at least 2.5 billion lei. “It is best for the Republic of Moldova to access external financial resources, which are several times cheaper than internal ones. If in recent years the Republic of Moldova has faced the problem of lack of external financing and has had to replace external financing with internal financing, which is very expensive, the current and future Government must replace external financing by attracting external financing, thus ensuring stability. exchange rate and reducing the burden of servicing public debt, “said the economist.
The economic analyst claims that the Republic of Moldova has no chance of development if it does not borrow from abroad, because it has an infrastructure in a disastrous state and which is not fair to be financed from budget expenditures. “It is not fair to do some infrastructure work on behalf of the current generation for future generations. Infrastructure investments must be distributed to all generations who are expected to benefit from these investments “, said the economic analyst.
Veaceslav Ioniță mentions that the Republic of Moldova would need 3.1% of GDP annually for road repairs and construction. For transport – investments of 1% of GDP are recommended. For electricity and power lines – 2.5%. For energy efficiency – 0.4%, water and sewerage – 0.9%. In total, investments in infrastructure of at least 22.6 billion lei or 8.5% of GDP are required annually. “The biggest challenge for the Government is the lack of an investment plan for the next ten years, to show the financiers what it needs to be financed for. Without these things, the Republic of Moldova remains an underdeveloped country, where the costs for an investment in the economy are 20-30% higher than in any other country, due to the lack of adequate infrastructure. In recent years, the budget of the Republic of Moldova has been one of survival and not development. The Republic of Moldova needs to move from a survival budget to a development budget. This can only be done by attracting external grants and loans. 5-6% of GDP is needed annually for infrastructure investments only from the Government “, the expert mentioned.
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