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Moldova’s leasing law to boost market development
EBRD helps enact new Moldovan law
A new Moldovan law extending the scope of leasing operations, and thus
increasing flexibility in the economy, went on to the statute books this
month. The legislation, which repealed the existing 1996 law, grew out of a
technical cooperation project sponsored by the Balkans Regional Special Fund
(created by Austria, Canada, Germany, Netherlands, Norway, Switzerland and
Taipei China) and run by the European Bank for Reconstruction and Development.
Leasing transactions – not only of property but also of equipment and tools –
have increased drastically over the past few decades. Businesses that need to
keep their equipment up to date, but are reluctant to take out large loans to
invest in tools or machines which risk becoming obsolete before the end of
their working life, are likely to find the lower-risk option of leasing
attractive.
The EBRD’s 2003 strategy for Moldova recommended supporting new financial
products such as leasing and mortgage financing if market and regulatory
conditions were right. Its successful technical cooperation project aimed to
iron out shortcomings in the existing law and make leasing finance more
accessible to more people and businesses in Moldova.
The new law broadens the range of goods that can be offered for lease; allows
all citizens, not just entrepreneurs as before, to acquire leases for
equipment ranging from factory tools to simple domestic washing machines; and
removes a tax loophole that earlier placed an unnecessary burden on
entrepreneurs who opted to lease rather than buy equipment.
Leasing is expected to become more popular in Moldova, because there is more
harmonisation and clarity within the applicable system as a result of the new
legislation, said Emmanuel Maurice, General Counsel of the EBRD.
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