CHISINAU (Reuters) - Moldova must clean up its scandal-plagued banking sector if it is to receive the bulk of a $179 million loan from the International Monetary Fund, the country’s central bank chief said on Monday.
Sergiu Cioclea told Reuters the IMF approved the three-year loan in November after the former Soviet republic promised to combat money laundering by improving the transparency of the ownership structures of its largest banks.
“The success of these reforms will depend on how the banks learn and comply with the new rules of the game,” Cioclea said.
Moldova received the first tranche of the IMF loan worth about $36 million in December. The disbursement of further payments in the second half of 2017 will depend on the progress of reforms.
Negotiations over the loan were disrupted in 2015 by the disappearance of the equivalent of one eighth of Moldovan national output from the country’s banking system, which plunged it into economic and political crisis.
Moldova had been counting on the loan, and another from the European Union, to ease its fiscal deficit.
The country’s three largest lenders, Moldova Agroindbank, Moldindconbank and Victoriabank, which together account for more than half of the market, have until March 31 to comply with the ownership structure requirements. Other banks have until the end of the 2017.
It was a lack of accountability in the banking industry that allowed such a huge amount of money to go missing from the banks.
Under the agreement, Moldova also will need to have met an approved 2017 budget deficit target of no more than 3 percent of gross domestic product and have passed laws to boost financial stability.
Reducing bureaucracy by shrinking the number of cabinet ministries to nine from 16 is another key reform.
Reporting by Alexander Tanas; Writing by Alessandra Prentice; Editing by Richard Lough
Our Standards: The Thomson Reuters Trust Principles.