National Bank of Moldova further toughens capital requirements for banks to hold back credit expansion

CHISINAU. Nov 21 (Interfax) - The National Bank of Moldova (NBM) has raised the countercyclical buffer rate by 1 percentage point (pp) to 1.5% in order to increase the stability of the financial sector, the NBM press service reported.

The new rate will come into effect on May 13, 2026. In accordance with a resolution of the NBM from August of this year, a rate of 0.5% will be effective from January 30, 2026 until this point, taking into account the average length of the credit cycle. The buffer rate is currently at 0%, after the NBM made several decisions to keep it at this level.

The regulator said that it had increased the rate due to a growth in the credit expansion of banks. According to data from the NBM, the ratio of loans issued to quarterly GDP rose to 103% in the first quarter of 2025, from 91.7% and 97.8% in the third and fourth quarters of last year respectively. As a result, "loans to GDP" exceeded its long-term trend by 7.8% in Q1 2025, versus 2.7% in Q4 2025 and "negative 3.5%" in Q3 2025. "The indicator of private sector debt to GDP testifies to an accelerated expansion in the financial sector, characterized by a significant growth in lending," the statement reads.

The countercyclical buffer is an additional requirement for the capital of banks in periods when lending grows at an accelerated rate. The size of the buffer is calculated from the overall amount of credit exposure. The countercyclical buffer is aimed at preventing an excessive growth in lending in the banking sector, and Moldova reviews the rate once each quarter.

The NBM decided it was necessary to curb the growth in banks' loan portfolios due to an easing of monetary policy, the refinancing rate having been raised continuously due to a sharp rise in inflation at the beginning of the year, which was caused in turn by a drastic increase in energy tariffs.