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 Monitoring→Economy→The Socioeconomic Environment

Economic Policies on November 1–14, 2004

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Moldova in the world

Republic of Moldova — slow pace of reforms

According to Transition Report released by the EBRD, Republic of Moldova ranks among countries having a slow pace of reforms, however above average, i.e. 2.7 as compared to maximal 4.5. FITCH agency had a similar opinion on the slow pace of reforms in Moldova.

Under the report, Moldova is ahead of many CIS countries, Azerbaijan, Tajikistan, Uzbekistan, Belarus and Turkmenistan, but lags behind Russia, Ukraine, Georgia, Armenia, Kazakhstan and Kyrgyzstan. ERBD points to the considerable progress made by Central Europe with Hungary being in top, followed by Czech Republic, Slovenia, Estonia and Latvia. To the other end, Turkmenistan and Belarus are seen as having lower level of reforms with the lowest score of 1.5.

In the ten years since it granted the first loan in Republic of Moldova, EBRD funded projects worth 170 million USD. It was the only one to fund both governmental and private projects. A total of 29 projects were funded in Moldova representing 0.9% of the total EBRD’s investment in CEE and Central Asia.

WB supports PRSP and is ready to finance

On November 11, the World Bank’s Board of Executive Directors discussed and approved Moldova’s Economic Growth and Poverty Reduction Strategy Paper (EGPRSP) and stated it stands ready to support its enforcement. The amount would be decided on December 14, 2004 when World Bank’s Board of Executive Directors would discuss the new Country Assistance Strategy for the next three years.

The Executive Directors noted with concern several critical areas where current policies do not match those articulated in the EGPRSP. These include slow progress in implementing structural reforms, increased government interventions in economic activity. Directors urged the authorities to rectify these policy actions, especially in the areas of state monopolies, licensing and regulation, land consolidation and agriculture subsidies, pension reform, and privatization.

If successfully implemented, WB would double its assistance to Moldova. It is said that Government would channel WB funds to developing rural services, social welfare, education, infrastructure and support to small and middling business. Some independent experts say the document is not “sustainable”, as 95% of EGPRSP actions would not improving the situation existing in the country. According to them, it is more of a pay check issued to World Bank for solving important issues.

EGPRSP includes economic policies and actions that are to be implemented over 2004–2006 so as to bring economic growth and reduce poverty. In particular it provides for reducing by half the number of people living on less than 2.15 USD per day by year 2015, i.e. from 39.8% in 2002 to 18.0% in 2015. Non-reimbursable credits shall cover for 60% of the funds necessary to implement EGPRSP estimated at 9.2 billion Lei.

October 18–31, 2004 November 15–28, 2004