Agriculture, a sector with low credit risk

Over 25 banks and non-banking institutions have filed letters of intent in order to identify
solutions for implementing the financial instruments through the National Rural Development Plan 2014-2020, MADR informs.

Banks play a very important role in the process of absorbing the funds earmarked for Romania in the agriculture sector, the Agriculture and Rural Development Ministry (MADR) along with the ministry’s two payment agencies lately exerting considerable efforts in presenting viable projects. At the same time, banks have become receptive and have started to launch specific credit products for the agricultural sector.

“Personally I always claimed that a good communication and collaboration with the banks is beneficial for farmers, who can obtain short-term loans in more advantageous conditions, without extra guarantees being asked from them. Agriculture has lately become a sector with low credit risk, this aspect being proven in particular by the credits offered on the basis of certificates issued by the Agency of Payments and Intervention in Agriculture (APIA) as part of several forms of support implemented by it,” Agriculture Minister Daniel Constantin stated in an interview for ‘Bursa’ daily.

Over 25 banks and non-banking institutions have filed letters of intent in order to take part in the creation of working subgroups in order to identify solutions for the implementation of financial instruments through the National Rural Development Program (PNDR) 2014-2020, according to a MADR preliminary list.
Economic analyst Aurelian Dochia considers that the banks’ growing interest in financing agriculture is determined, on the one hand, by the higher attractiveness of the new PNDR and, on the other hand, by the financial institutions’ need for sourced of crediting.

In the opinion of MADR secretary of state Achim Irimescu, the fact that a great number of financial institutions want to collaborate with the ministry in order to identify solutions for implementing the financial instruments through PNDR 2014-2020 is a signal that the banks have understood that the financing of agriculture does not entail large risks.

Emphasis on irrigations

The chapter concerning the improvement of the quality of agriculture includes the implementation of a national system of irrigations. Asked what the stage of this project is, minister Constantin stated that the source of financing for carrying out this initiative consists of the Structural Funds offered by the European Commission in the 2014-2020 period, the estimated value of the works standing at EUR 982 M. “Our country has recently sent to the European Commission, through the European Funds Ministry, the investment proposals, as part of the informal dialogue for the preparation of the Partnership Agreement 2014-2020 and of the Operational Programs.

Thus, the sum of approximately EUR 220 M was chosen for the rehabilitation of the main irrigation infrastructure belonging to the state’s public domain on 195,000 hectares, including 13 irrigation systems that are generally located in the country’s southern and eastern regions,” the Agriculture Minister added.According to the national irrigation strategy, the three irrigation systems will be linked to sources of supply from the Siret-Baragan Canal that is built in proportion of 90 per cent.