In Moldova we focus on:
- Creating the conditions to support private sector development: The EBRD is supporting measures to improve the business environment, both through investment projects which help attract foreign direct investors, as well as through engaging with the Moldovan authorities to promote much-needed reforms. The EBRD is supporting the Economic Council, an advisory body to the Prime Minister, which brings together policy-makers and the business community with a view to enhancing the business climate. Improving the business climate is crucial for the Bank’s ability to further support the private sector and attract investment. Governance and transparency in the banking sector are particular concerns and the EBRD is working closely with the authorities to address them.
- Promoting European standards and regional integration: The EBRD is investing in projects which help Moldova develop value-added exports – especially in manufacturing and agribusiness sectors – which will be competitive in regional markets. As Moldova and the EU are moving forward towards a Deep and Comprehensive Free Trade Area (DCFTA), Moldovan companies need to adopt higher production and quality standards than those currently applied. In addition, the EBRD is financing improvements in the country’s infrastructure to develop links to neighbouring countries as well as internal transport infrastructure needed to bring domestic producers closer to their markets. The Bank is contributing to strengthening energy security and efficiency, and is helping develop the telecommunications sector.
- Enhancing commercialisation and sustainability of municipal enterprises: The EBRD is continuing to finance regional and municipal water supply companies and is looking into ways to modernize district heating and solid waste management and promote public-private partnerships (PPPs) in the sector.
As well as being a country where the EBRD works, Moldova is also an EBRD donor. Moldova contributed € 325,000 to the Eastern Europe Energy Efficiency and Environment Partnership (E5P) Fund in 2015. The EBRD project for Balti District Heating will receive funding from the E5P.
The EBRD’s latest Moldova strategy was adopted on 29 November 2017
EBRD forecast for Moldova’s Real GDP Growth in 2019 3.5%
EBRD forecast for Moldova’s Real GDP Growth in 2020 3.8%
The Moldovan economy maintained robust growth of 4.0 per cent in 2018, supported by expanding household consumption and exports, albeit at lower rates compared to the previous year, and strong capital investments. A further increase in remittances and a 9.9 per cent rise in real wages helped uphold disposable incomes and, consequently, household consumption. Growth of gross fixed capital formation accelerated from 8 per cent in 2017 to 14 per cent in 2018. It was accompanied by 16 per cent growth in construction output. Alongside trade and industry, the construction sector was one of the main drivers of growth on the production side. On the back of rising investments and private consumption, the growth of import volume outpaced that of exports. The current account deficit almost doubled to 10.5 per cent of GDP in 2018 from a year earlier and was mostly financed by an increase in foreign currency household deposits in the banking sector. As a result, the Moldovan leu remained relatively stable during the course of 2018 and foreign reserves were sustained at US$ 3.0 billion, covering 5.6 months of imports. Inflation slowed from an average of 6.6 per cent in 2017 to 3.0 per cent in 2018 and further to 2.5 per cent year-on-year in the first three months of 2019. In March 2019, a 63.9 per cent stake of Moldinconbank, the second largest bank in Moldova, was acquired by a strategic foreign investor. This marks the completion of the clean-up of the banking sector, as non-transparent shareholders have now been replaced by fit and proper foreign strategic investors in all three systemic banks. However, long-standing structural and demographic challenges are compounded by current uncertainties regarding the inconclusive outcome of parliamentary elections in February 2019 and delays in disbursements of funds from international partners. We forecast Moldova’s real GDP to grow by 3.5 per cent in 2019 and by 3.8 per cent in 2020.