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EBRD delegation discusses business climate in Moldova

By Olga Rosca

Chisinau, Moldova

EBRD’s regional management repeats call for urgent reforms

Francis Malige, EBRD Managing Director for Eastern Europe and the Caucasus, visited Moldova on 28-29 June for high-level talks.

He met Pavel Filip, Prime Minister of Moldova; Andrian Candu, Speaker of the Moldovan Parliament; Octavian Calmîc, Minister of Economy; Sergiu Cioclea, Governor of the National Bank; and business associations and foreign partners.

Discussions focused on the EBRD’s investment in Moldova, on priorities for the Bank’s next strategy for the country, and on business climate reforms.

The EBRD is the largest institutional investor in the country; since the start of its operations in Moldova, the Bank has invested close to €1 billion in more than 100 projects in the country.

In a meeting with the authorities, Francis Malige reiterated the EBRD’s strong commitment to supporting the Moldovan economy and economic reforms: “Moldova has so much potential. It can benefit from foreign investments that bring growth, jobs and know-how. We see some of this already – take, for example, the FDI-driven production and export of automotive parts in Moldova. A significant part of Moldova’s potential remains untapped. If you secure macroeconomic stability, and improve governance in the banking sector and the business environment, this will attract many more investors who will create many more jobs.”

In recent times, against a backdrop of challenges in the banking system, the EBRD – previously a major lender to the sector – has refrained from new business with certain banks, due to their ownership by non-transparent shareholders.

This has had a negative impact on the EBRD’s ability to finance local businesses. “Bad governance and lack of shareholder transparency in banks inhibits proper lending to individuals and businesses,” added Mr Malige.

On 6 June 2016, the EBRD announced that it had increased its stake in Victoriabank, Moldova’s third-largest lender, from 15 to 27.5 per cent. The move aims to restore effective corporate governance and to ensure Victoriabank’s sound financial performance.

Victoriabank has been operating without effective corporate governance since September 2014 when its supervisory board was suspended by a court order.

Mr Malige said: “Victoriabank’s largest shareholder, Cyprus-based Insidown, has called an extraordinary meeting of shareholders for 8 July. At that meeting, we expect a breakthrough in terms of the restoration of corporate governance in Victoriabank. We want to make it clear and beyond any doubt that restoring corporate governance is in the interest of all shareholders, of the authorities and of the business community in Moldova. The EBRD’s work with Victoriabank represents part of a concerted effort to modernise Moldova’s banking sector and enhance entrepreneurs’ access to finance. This is also in the best interest of all stakeholders. A breakthrough on Victoriabank would allow the EBRD to be of greater help in the banking sector and beyond.”

Helping to create an environment that supports private sector activity is part of the EBRD’s strategy in Moldova. The Bank also focuses on promoting regional integration and European standards across all sectors, as well as on developing efficient and sustainable public utilities which have a direct impact on people’s lives.

The EBRD’s operations in Moldova are headed by Dimitri Gvindadze, who took up the Chisinau-based position on 2 May 2016 and also attended this week’s meetings.

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