Moldova: the 2021 was marked by an unprecedented increase in individuals’ debt from official sources of financing - IDIS Viitorul.
Veaceslav Ionita, expert on economic policy at the Institute for Development and Initiatives, stated this, noting that last year the volume of loans taken by Moldovan residents from banks and non-banking companies amounted to 33 billion lei, which is almost 8 billion lei more than in 2020. However, according to him, this figure could actually be much higher, since citizens have two more unofficial sources of funding: relatives and friends; and persons offering interest-bearing loans (usurers). The expert noted that, according to a survey conducted between January 24 and February 5 by CBS Research, commissioned by the Bucharest Ioan Bratianu Institute of Political Science and International Relations of the Romanian Academy (ISPRI) and IDIS Viitorul, about 28.9% of Moldovans have debts, of which: 21.9% have a loan taken from a bank; 9.6% - a loan from a non-banking financial institution (savings and loan association, leasing company, microfinance company); 8.2% - borrowed money from relatives or friends, 1.4% - from individuals who provided interest-bearing loans. Of these, 2.9% said they borrowed from at least three sources. “In other words, about 60,000 Moldovan citizens have a lot of debts,” the expert said. Veaceslav Ionita claims that in addition to the 33 billion lei that Moldovans borrowed from banks and non-bank financial companies, it is estimated that another 10 billion lei were borrowed by them either from relatives or friends, or from individuals who offer loans under interest. “In 2021, residents of Moldova borrowed about 22 billion lei from banks, about 10.2 billion lei from non-banking financial companies. From relatives or friends - about 8.6 billion lei, and from individuals offering loans at interest - 1.5 billion lei. Today, almost every third citizen of Moldova declares that he has a loan,” said Veaceslav Ionita. The economist says that of those who have a loan today, 47% experience problems with its repayment. About 30% of them cut costs to repay the loan; 37.2% take a loan elsewhere to repay the first loan; 24.8% - have a delay in the repayment of the loan, and 6.6% - have a very large debt in terms of the loan repayment. “Every third citizen of Moldova who has a loan today has problems with repayment. Among young people aged 18 to 29, the proportion of those who have problems with loan repayment is 27.5%; persons aged 30-44 who experience difficulties make up 30.6%, those aged 45 to 59 - 37.1%, and those aged 60 and over - 42.6%,” the economist said. The analyst also stated that today in Moldova 14.9% of citizens, or every 6th, say that they have a loan, but they cannot repay it on time and register delays. Among young people, this figure is 10.4%, among people aged 30-44 years - 12.8%, aged 45-59 years - 18.6%, and among people over 60 years old, the proportion of those who are in loans arrears is 26.8%. The last segment is the most vulnerable in this respect. “Among the residents of Moldova who have taken a loan and cannot repay it, 12.9% say they have debts to banks; 21.3% - to non-banking financial companies, 22.8% - to relatives or friends, and 43.8% - to individuals providing interest-bearing loans,” the analyst said. According to Veaceslav Ionita, the most vulnerable are those who borrow from private individuals who offer money at interest. Almost every second citizen who took money at interest from such individuals stated that he/she had a delay and could not repay his debt. The expert's recommendation is that when applying for a loan, no matter where, it is necessary to ask what will happen if there are difficulties in repaying the debt, because the financial institution indicates this in the contract, and citizens do not pay attention to this important issue. “Usually the biggest problems that citizens face are the particularly high fines applied in connection with this. One needs to check the terms of the loan. The biggest problem that citizens face when getting a loan is not the interest rate, but the “draconian terms” for those cases when they face difficulty in repaying the debt,” the expert said. He also advises citizens not to borrow from moneylenders, but to try borrowing money from relatives or friends. “If it is not possible to take money from relatives or friends, one need to choose a bank where the probability of getting into difficulty with the payment is the least, and only then apply to a non-banking financial company,” said Veaceslav Ionita. // 14.02.2022 – InfoMarket
