The IMF urges the NBM to exercise caution and not to rush into easing monetary policy, while closely monitoring inflation risks, and to adjust the policy rate strictly in line with inflation trends, which, due to new shocks, risk exceeding the target range (5% ± 1.5%). It is also recommended to maintain the flexibility of the leu exchange rate and to sustain sufficient foreign exchange reserves to absorb external energy and geopolitical shocks.
Overall, within the framework of the current cooperation program with the IMF, Moldova’s banking sector is assessed as stable and capable of absorbing macroeconomic risks. However, the Fund recommends that the regulator tighten macroprudential requirements for banks and revise the “Prima Casă Plus” program to protect the financial system.
Priority: Protecting Banks
It is proposed to tighten capital requirements for commercial banks by introducing a “positive-neutral countercyclical buffer” to protect against potential shocks, even in the absence of direct signs of economic overheating.
The positive-neutral countercyclical capital buffer (PnCCyB) mechanism, designed to build up additional reserves for commercial banks, is needed as a permanent safety net for the banking sector in the event of sudden shocks. For example, to shield banks from unforeseen mortgage losses, foreign exchange risks, liquidity crises, etc. Therefore, the NBM recommends closely monitoring deposit concentration (given the trend among customers to prefer checking accounts over time deposits) and strengthening control over credit growth.
To mitigate foreign exchange risks, the NBM recommends continuing to apply differentiated (higher) reserve requirement ratios on foreign currency deposits.
Despite the high level of dollarization of savings (nearly 36% of savings), risks to banks are strictly limited by the NBM’s macroprudential measures. The share of foreign-currency loans is significantly lower—it accounts for only 22% of the total volume and shows a marked downward trend, as such loans may only be issued to borrowers with foreign-currency revenue.
