Solutions for Mobilising Domestic Resources for Infrastructure Projects and National Development: The Government Securities Market
Automatically translated summary. The full text is available in Romanian.
Independent Think Tank “Expert-Grup” argues that developing and liberalising the government securities market in the Republic of Moldova could boost the capital market and the wider financial system. The case is made against the backdrop of the need to reform the financial sector after the banking frauds.
The current mechanism for placing and trading government securities neither fully meets the financing needs of long-term projects nor delivers an optimal cost relative to the low risk assumed. The capital market has low liquidity and somewhat limited access, so it cannot offset banking-sector weaknesses in financial intermediation. Despite the 2014-2015 crisis, banks still dominate the financial system. In 2013-2016 they held on average about 78% of outstanding government securities, and the regulatory framework reinforces their dominant position.
The Ministry of Finance treats developing the domestic market and extending maturities as a priority. Its plan includes strengthening communication with market participants, revising the criteria for selecting primary dealers, evaluating their performance and enabling stock-exchange trading of securities with maturities above one year. The main risks cited are low responsiveness of market participants, macroeconomic volatility and monetary policy implications.
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