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Economy

Moldova signs agreement with EU on €100 million financial assistance with condition of continuing reforms, bank fraud investigation

On November 23rd, the Republic of Moldova signed the agreement with the European Union regarding the macro-financial assistance of 100 million euros: 40 million of grants and 60 million as a loan.

The signing was made by the Moldovan Minister of Finances, Octavian Armașu, and the National Bank Governor, Sergiu Cioclea, on one side, and by the EU Commissioner for Economic and Financial Affairs, Customs and Taxation, Pierre Moscovici, on the other side. Prime-Minister Pavel Filip attended the meeting and reportedly discussed with Commissioner Moscovici on topics like the implementation of customs standards within the DCFTA, the IMF evaluation of the Moldovan economy or the consolidation of the banking market.

The conditions that need to be fulfilled by Moldova in order to get the long-awaited macro-financial aid were enunciated by the Commissioner for EU’s Neighborhood, Johannes Hahn, during the meeting with Filip. According to Hahn,  there is a need for further progress regarding reform agenda and a need to complete and publicise the results of the banking fraud investigation.


Filip also met with the European Council President, Donald Tusk, who underlined that Moldova is one of the most active members of the Eastern Partnership, and assured it has many friends in the EU.

Representatives of the Moldovan government are participating in the Eastern Partnership in Brussels.

Economy

Conditions that the European Union imposed to Moldova before disbursing tranches of €100 million assistance

On 23 November 2017, the Republic of Moldova signed the agreement with the European Union regarding the macro-financial assistance of 100 million euros: 40 million of grants and 60 million as a loan.

The so-called MFA was requested in August 2015 and in March 2016 by the Moldovan authorities. After long debates on the conditionality, the European Parliament, and the EU Council came to an agreement to offer Moldova the macro-financial assistance for 2 years and a half in three tranches, whose disbursement is conditioned by a certain list of criteria. According to the agreement, the European Commission will monitor the progress on key reforms together with the International Monetary Fund.

Technical criteria

Unlocking the first tranche of the macro-financial assistance will require Chișinău to implement 10 reforms in five different domains:

Public sector governance:

  • implementing the new reform strategy of the public administration;
  • ensuring the efficient functioning of the National Agency for Solving Contestations;
  • adopting the law on the state and municipal enterprises with the aim of increasing transparency and responsibility of the latter;
  • adopting the new law of the Court of Accounts and creating a Parliamentary Committee of Public Accounts.

Fight against corruption and money laundering:

  • adopting the law on preventing money laundering and combatting terrorism financing;
  • selection of the president and vice-president of the National Authority of Integrity by the Integrity Council;
  • ensuring the efficient functioning of the Agency for Recovering the Defrauded Goods by the Parliament through sufficient funding and personnel.

Reforms of the energy sector:

  • adopting a new Energy Law with the aim of consolidating the governance and regulation of the energy sector, including the independence of the National Agency for Reglementation in Energetics.

Business climate and DCFTA implementation:

  • implementing measures to reduce the administrative tasks needed to start and manage a business;
  • adopting the new law on the Customs Service.

Respect to multi-party system and the degree of implementation of the recommendations of the Venice Commission

According to ZdG.md, the agreement stipulates that the European Union will also take into the consideration the respect to efficient democratic mechanisms- a multi-party parliamentary system, rule of law, respect for human rights-, but also progress in improving liberal, independent and pluralist governance,  consolidation of the independence of the judiciary system and the implementation of the Association Agreement, including the Deep and Comprehensive Free Trade Area. A special focus is drawn upon the fact that the EU Commission and the External Action Service will also particularly monitor how the Moldovan authorities implement recommendations formulated by the Venice Commission and the OSCE/ODIHR in regard to the recent change of the electoral system.

If the Commission gives a negative evaluation to the work of the Moldovan Government, it reserves the right to stop the payment of the tranches until Moldova proves the respect of conditionality.

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Economy

2018 budget plan adopted in first reading by Moldova Parliament

On December 1st, the Parliament of Moldova adopted in the first reading the Law on the state budget for 2018.

The plan forecasts a GDP growth of 3% in 2018 up to the level of 160,1 billion lei (9,3 billion USD). The annual inflation rate is expected to be 6%.

In 2018, the Government expects incomes of 56,9 billion lei- 7,8% more than in 2017-, and expenditures of 61,7 billion lei (8,2% more than in 2017). Thus, the budgetary deficit is estimated to be 4,7 billion lei.

The main source of income would be the income taxes, while the external grants meant for the budget and for public projects are expected to cover around 2,8 billion lei- 1,6 billion lei more than in 2017.

The general budget plan for 2018 is adopted in the first reading, while the specific articles of the law on public finances and fiscal responsibility are voted on separately in the second reading.

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Economy

EIB offers Moldova a loan of 120 million euros for the development of horticulture

The European Investment Bank offers our Moldova a loan of about €120 000 000 to restructure the value chain of the horticultural sector. The beneficiaries are over 300 economic agents and over 52 thousand peasant households, who will be able to access the money within the “Livada Moldovei” project, organized by the Ministry of Agriculture, Regional Development and Environment.

The project will be implemented by 2021 and aims at rehabilitating the horticultural sector by means of technology and mechanization of primary production processes in horticulture, endowment with irrigation and anti-hail systems, modernization of processing processes and diversification of Moldovan fruit market.

The minimum investment allocation is 5000 euro. Loans of up to €5 000 000 can be accessed.

The credit term is up to 10 years with a grace period of up to 4 years. The interest rate is a competitive one, about 5-6% for foreign currency loans.

The horticultural sector occupies a very important place in the country’s economy. This area accounts for about 14% of the export revenue, surpassing other sectors, which will increase the competitiveness of Moldovan products on the European markets.

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