Dumitru Budyanski
LP: – Mr. Dumitru Budianschi, you have been a consistent advocate for reforming the capital market. What has hindered its development so far?
– The current state of the capital and financial markets in Moldova is the result of a combination of many factors. If we look beyond overly general factors related to the geopolitical situation, the public’s understanding of the market economy and democracy, the small size of the market, and so on, I would say that the manner in which mass privatization was carried out and the subsequent events, the quality of the judicial system, and the large share of the unregulated economy are factors that, in particular, have led to the current situation regarding the capital market.
The understanding of economic development and the role of financial markets has also hindered the development of the capital market. For a long time, a one-sided conception of the role of the capital market prevailed in the Republic of Moldova.
This concept essentially boiled down to the idea that the Moldovan economy could develop based on financing derived solely from the credit system, and that the absence of a capital market was a consequence of the low level of economic development. Thus, the inverse relationship—according to which a functional capital market, in turn, is a driver of economic growth—was not taken into account.
LP: – In your opinion, what needs to be rethought in order for the capital market to become an effective driver of the economy?
– I do not believe that we have any deeply rooted prejudices hindering the development of the capital market. Rather, as I have already said, there is a superficial understanding of the capital market’s role in the economy of the Republic of Moldova. This is especially true when considering all the current elements and trends in the development of information technology and its application in finance.
Currently, I see that the NSC and the Government base their activities on the premise that the capital market has a dual relationship with economic growth: it supports economic growth while simultaneously reflecting the level of economic development.
Thus, it can be said that there have been qualitative changes in the approach to the role of the capital market in the Republic of Moldova. The time has come to implement the policy document—the Capital Market Development Strategy for 2025–2030, approved by Parliament in 2025—which outlines the main directions for the development of the capital market.
LP: – Why do you believe that Moldova will need a more developed capital market going forward?
– A strong economy requires effective mechanisms that allow capital to circulate quickly into competitive sectors capable of generating higher returns.
In this regard, the quality of the financial system—with all its components, including the capital market—plays a decisive role. Without these mechanisms, business initiatives cannot quickly find suitable sources of financing and are less likely to succeed.
The economy is in a constant state of transformation: some enterprises disappear, while others emerge, and the capital market can offer several ways to rapidly reallocate resources from unprofitable sectors to competitive ones with growth potential.
As you can see, a significant portion of the economic assets seized as a result of privatization—which currently consist mainly of land and buildings—cannot be capitalized into the new competitive projects that Moldova needs.
LP: – Does the role of the state and the government become decisive in overcoming these problems?
– Small economies in transition with weak institutions have far fewer opportunities to establish and develop a capital market.
However, with regard to Moldova, it is worth noting that in recent years conditions have emerged—such as the quality of institutions, including the judicial system; political stability; and the overall maturity of the financial system—that create the necessary prerequisites for the development of a capital market.
Under these circumstances, to overcome other constraints—related, in particular, to the size of the market and companies, low competitiveness, and other economic factors—public policy aimed at supporting the formation and consolidation of the capital market is necessary.
Overall, the government plays several important roles in the development of the capital market. Depending on the level of development of the capital market and the conditions in each country, the significance of these roles varies: some come to the forefront, while others take a back seat.
In the case of the Republic of Moldova, the government plays three key roles: updating the entire legal and regulatory framework; facilitating the creation of trading and post-trading infrastructure; and promoting and facilitating the development of both supply and demand in the capital market.
Unlike countries with strong and complex economies, where the state’s primary role is limited to establishing the legal and regulatory framework, in Moldova this is insufficient for market development.
Thus, yes, in the Republic of Moldova, the state’s role is crucial for the development of the capital market, especially in the initial stage.
LP: – Does this mainly concern the state’s role in creating new capital market infrastructure?
– I would note that, in the medium term, the key elements of the capital market infrastructure that need to be developed are the stock exchange, investment service providers, the Central Securities Depository, and registration companies.
The need to modernize the stock exchange has been apparent for many years, but the existing operator showed no interest in making the necessary investments.
Consequently, it became necessary to find a solution to this problem, since, once an adequate legal framework is in place, the establishment of a stock exchange operating according to modern standards is absolutely essential for the subsequent development of the market.
In this context, following a process that lasted about three years, thanks to the participation of the private sector—and especially the Bucharest Stock Exchange— MAIB and EBA, as well as with the participation of the Moldovan authorities, a new stock exchange was established—the Moldovan International Stock Exchange (BIM).
Although the state owns only 20%, its participation effectively demonstrated confidence in and support for the development of the capital market, thereby playing a central role in the shareholders’ decision to establish BIM.
We are currently in the process of obtaining authorization to establish the new stock exchange and hope that this process will be completed by August 2026.
After submitting its application for authorization, BIM will be required to demonstrate its full capabilities, including its information system, staff, and the stock exchange’s governing bodies.
Thus, I expect that as soon as BIM receives authorization, it will begin operations as quickly as possible.
But we must understand that the process of launching the stock exchange will take time to attract investment firms, issuers, and so on. Therefore, we hope that by the end of this year, we will see a fully functioning stock exchange.
LP: – Although the government’s involvement in the creation of BIM is evident, what other “government intervention” is necessary to develop the capital market?
– Developing the market is indeed the most challenging task, requiring time, a strategic approach, and perseverance. Analyses conducted as part of the Capital Market Development Strategy showed that the capital market is constrained by both a lack of supply and insufficient demand.
The volume of transactions generated by existing issuers is insufficient to cover the costs necessary to maintain and develop high-quality investment services. To ensure a transaction volume that exceeds the critical threshold during the initial stage of market development, the participation and judicious involvement of the government are necessary.
Six key measures of government intervention can be identified that could significantly contribute to the development of the capital market:
– Establishing a system of government support for private companies that is neutral with respect to their method of financing.
– When reforming state-owned and municipal enterprises, consider listing them on the stock exchange and financing them through capital market instruments.
– Making greater use of the capital market to finance projects and public debt.
– Support for institutional investors, particularly through the establishment of mandatory private and professional pension funds.
– Implementing support programs to enhance the qualifications of investment service providers.
– Financial education.
Some of the restrictions are also related to financial regulation. In Moldova, the most active issuers in the capital market are, and will continue to be, representatives of the financial sector.
Therefore, maintaining the requirement for shareholders holding more than 1% of the capital to obtain prior authorization from the NBM is an obstacle to the sector’s development and the growth of the capital market.
Another obstacle is the inability to issue bonds in foreign currency, even though it is possible to take out loans in foreign currency.
LP: – Why are pension funds so important for the capital market? What could the government do—and when—to facilitate their establishment?
– Yes, indeed, pension funds are very important for the capital market, but they are even more important for ensuring a higher level of income for retirees.
Therefore, I would strongly advocate for the development of the pension system in Moldova specifically to consolidate retirees’ incomes and reduce the burden on the first tier.
In other words, first and foremost, to strengthen the sustainability of the pension system and improve relations between the government, employers, and employees.
But it is also well known that the existence of pension funds has a positive impact on the economy by creating so-called “long-term money.”
At the same time, to once again emphasize the complexity of economic processes, it should be noted that the emergence and development of private pension funds require a developed capital market; otherwise, investment opportunities for accumulated resources are limited, and, consequently, their growth with minimal investment risks cannot be ensured.
It is important to note that the funds accumulated through pension funds belong to the individuals on whose behalf the contributions were made. That is, the accumulated funds are used by retirees or passed on to their descendants.
LP: – What else can the government do?
– There are two approaches through which the government can directly stimulate the creation and development of pension funds.
The first approach, which can be considered the most effective in the context of the Republic of Moldova, is the creation of a second pillar for the state pension system, under which every worker would be required to contribute to a fund that they could use upon retirement.
The second approach involves creating strong incentives through fiscal policy:
– Tax incentives for workers (individuals), including deductions from personal income tax for amounts contributed to a pension fund.
– Incentives provided to employers through income tax deductions for payments made to occupational pension funds, as well as fiscal incentives in the form of tax credits.
– Incentives provided to pension funds in the form of an exemption from income tax on capital gains.
Even if these two approaches are the most effective for developing the pension system, efforts in the third area should not be underestimated, where the government acts as a mediator in the dialogue between labor unions and employers, creating platforms through which contractual relationships between social partners are established. Developing this structure is particularly important for the creation of occupational pension funds.
Currently, there is one registered manager in the Republic of Moldova that manages a private voluntary pension fund. In accordance with the provisions of the Capital Market Development Strategy for 2025–2030, the National Commission for Financial Regulation (NCFR), in collaboration with government agencies, is working to identify optimal solutions for the rapid development of the private pension system.
LP: – A draft budget policy was recently published. To what extent does it contribute to the development of the capital market?
– The National Financial Market Commission will analyze the proposed draft and develop recommendations that will help achieve the goals of the Capital Market Development Strategy, which was approved by Parliament in 2025. However, the final decisions rest with the government and the ministries responsible for the relevant policies.
It would be advisable to consider the incentives and motivations we wish to create for investors. For example, if we want to develop more competitive business projects, financing these projects through corporate bonds and stock offerings is often a more suitable tool than bank lending.
In this context, reducing taxes on these instruments would be a fair policy. Let’s hope that the final version of the tax policy will be more focused on promoting the development of the capital market by reducing or eliminating taxes on capital gains from stock transactions, as well as by providing additional incentives to private pension funds.
LP: –Thank you very much for the interview!
Prepared by Irina Kovalenko
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