Moldova loan portfolio hits MDL 100bn amid inflation
Moldovans are increasingly relying on credit to meet day-to-day costs, as incomes fail to keep pace with high inflation.
The total loan portfolio held by commercial banks in the Republic of Moldova has hit almost 100 billion Moldovan Lei (MDL), according to economic expert Viorel Gîrbu.
"The commercial bank portfolio contains almost 100 billion MDL in managed funds extended to businesses and private individuals. Consumer and mortgage loans account for nearly half of this," he said.
Mr Gîrbu stresses that anyone taking on debt should ensure their monthly budget can cover repayments.
"When we take out a loan, we are allowing ourselves to consume certain goods sooner than we would otherwise be able to afford. Individuals must ask themselves if this consumption is worth the total cost, including the interest," the economist explained, adding that banks assess a loan's duration and volume based on the applicant's monthly income.
Referring to "fast loans," Gîrbu warned that although the sector is now better regulated, the risks remain high.
"We must not be misled by advertising that promises money in 10 minutes. Microfinance organizations' services are typically very expensive. In other countries, such borrowing has even triggered social crises," he noted.
On the subject of interest rates, Mr Gîrbu says the choice between a fixed or floating rate depends on the degree of risk each borrower is willing to accept.
"The fixed rate offers stability; you know exactly how much you will pay. The floating rate, however, can bring advantages only if the economy evolves positively. If the situation worsens, the cost of money rises, and the loan becomes more expensive," the economist explained.
Translation by Iurie Tataru
Autor: Daniela Gherman
