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Moldova’s Financial Sector Under the Spotlight: IMF Publishes New Guide on Financial Soundness Indicators

The International Monetary Fund (IMF) has published a new guide on financial soundness indicators (FSIs), aimed at improving the efficiency and transparency of Moldova’s financial sector. The guide provides a comprehensive framework for collecting and analyzing data on the soundness of banks, savings and credit associations, pension funds, and other financial institutions.

What are Financial Soundness Indicators?

The FSIs are designed to help policymakers, regulators, and market participants assess the stability and resilience of financial institutions, as well as monitor their performance over time. The new guide includes updated indicators and reporting templates for various subsectors, including:

  • Commercial banks
  • Savings and credit associations
  • Insurance corporations
  • Pension funds

Institutional Coverage and Consolidation Basis

The National Bank of Moldova (NBM) covers all 11 commercial banks operating in the country, as well as savings and credit associations. However, banks in liquidation are excluded from the compilation of FSIs, including three major banks whose licenses were withdrawn in October 2015.

  • The IMF mission suggested that the NBM continue to monitor the development of these entities for possible inclusion in the reporting population in the medium term.
  • The consolidation basis used by the NBM is based on a “domestic consolidation” (DC) approach, which aggregates stocks and flows for all commercial banks to obtain sectoral income statements and balance sheets.

Recommendations

To improve the accuracy and comparability of FSIs, the IMF mission made several recommendations:

  • Exclude Q3 2015 data and onwards for three delicensed major banks from the compilation of FSIs.
  • Resume reporting of FSIs for Q3 2015 and Q4 2015.
  • Update and submit the FS1 template to describe institutional coverage of FSIs for DTs and OFCs.
  • Reclassify foreign bank branches as domestically incorporated foreign controlled banks in FS1 for 2011-2014.
  • Update and submit FS1 for 2015-2018.

Accessing the Guide

The pre-publication version of the new guide is available on the IMF’s website at https://www.imf.org/en/. The guide will help Moldova’s financial sector stakeholders improve their understanding of FSIs and enhance the accuracy and transparency of financial data.