EBRD And National Bank Of Moldova Promote Local Currency Lending
By Olga Rosca
Moldovan companies can now benefit from loans denominated in the local currency, leu, provided by the European Bank for Reconstruction and Development (EBRD) and its partner financial institutions thanks to an agreement with the National Bank of Moldova.
The EBRD has secured reliable access to leu liquidity in the form of swap transactions up to a total of US$30 million and will continue local currency lending to companies to help them mitigate risks related to currency exchange.
EBRD Head of Moldova, Angela Sax said: “The EBRD has long placed a focus on local currency lending especially since the 2008-09 financial crisis, which exposed overdependence on foreign currency borrowing as a major vulnerability in developing countries. The COVID-19 pandemic has intensified that vulnerability, which makes meeting local currency financing needs more essential than ever. Through cooperation with the National Bank of Moldova we gained reliable access to leu, which allows us to provide leu-denominated loans to Moldovan clients.”
The agreement is part of the EBRD’s stepping up support for local companies as Moldova’s economy is confronted with the impact of the coronavirus pandemic.
It builds on the EBRD’s increased lending to local businesses via Moldovan banks following the 2018 turnaround of the banking sector. Since then, and by the end of 2020, the EBRD would have provided €92 million in financing to local lenders operating under transparent, reputable ownership and to high standards of corporate governance. The Bank is planning to maintain the same high level of engagement provided the reforms of the past years are irreversible.
The EBRD is one of the largest institutional investors in Moldova. To date, it has invested around €1.4 billion in more than 135 projects in the country to support private businesses, key infrastructure and to build a greener and more sustainable economy.