The National Bank of Moldova’s Inflation Report No.2 reveals that after a downward trend the previous year, in the first quarter of 2021 the annual inflation rate reflected the beginning of an upward trajectory, increasing from 0.2 percent in January 2021 to 1.5 percent in March 2021. However, it continued to fall below the lower limit of the 5 percent target range, IPN reports.
In the regional economic context affected by the pandemic, also against the background of internal restrictions and adverse weather conditions for the agricultural sector in the fourth quarter of 2020, the dynamics of economic activity in the Republic of Moldova continued to be negative, outlining preconditions for modest GDP in the first quarter of 2021.
At the same time, aggregate demand will continue to recover, although it will be disinflationary for the next 3-4 quarters. This will be influenced by the recovery of external demand, improvement of monetary conditions and recovery in agriculture this year.
“Monetary policy decisions strengthen the position of the National Bank of Moldova in creating monetary conditions to support the lending process, stimulate domestic demand and ensure an adequate level of liquidity in the banking sector, necessary for the recovery of the national economy,” said NBM Governor Octavian Armașu.
The report shows the revenues of the national public budget in January-March 2021 were by 11.1% higher than in the corresponding period last year. The national public budget expenditure rose by 12.1% compared with the first quarter of 2020. The interest rates on the state securities market in the first quarter of 2021 declined on all types of bonds, except for state bonds maturing in two years.
In the first quarter of 2021, excessive liquidity totaled 6.3 billion lei, a decline of 0.1 billion lei on the previous quarter.
The average interest rate on the balance of loans in national currency rose by 0.1 parentage points, while on deposits decreased. The average interests rates on loans and deposits in currency continued to follow the downward trend.