The European Commission has agreed to offer Moldova up to 150 million euros in aid to help it cover some of its external financing needs in the next two years.
Some 120 million euro of the financial assistance will be provided in medium-term loans at favorable financing conditions, while the remainder would be provided in grants, the Commission said in a press release.
Paolo Gentiloni, Commissioner for the Economy, said: “The European Commission continues to stand by the people of Moldova in these particularly challenging times. “
“Alongside the new IMF program, this proposed new Macro-Financial Assistance would provide both grants and loans at favorable rates to help support the Moldovan economy in the coming two years.”
Economic development
“This financing (is) conditional on the fulfillment of policy commitments aimed at addressing some of the most pressing problems weighing on Moldova’s economic development.”
The new assistance is to be disbursed to the impoverished former Soviet republic in three installments between 2022 and 2024.
Macro-Financial aid is extended by the EU to partner countries experiencing a balance of payments crisis. It is designed for countries that are geographically, economically and politically close to the EU, like Moldova.
The new MFA will add to two MFA operations through which the EU has disbursed a total of 160 million euros to Moldova since 2017.
Corruption
Moldova is tackling corruption and other governance problems that have weakened the fiscal and balance of payments positions in recent years, prompting support from international partners.
Moldova has been challenged this year by a significant energy crisis, which coupled with the post-pandemic recovery has further implications for the economic stability and outlook.
The proposed EU MFA, which first needs to be adopted by the European Parliament and the Council before it can be disbursed will go hand in hand with the new IMF program approved on 20 December.
Energy security
Conditions for the financing aim to address fundamental weaknesses such as good governance and fight against corruption, the rule of law, and energy security.
MFA is part of the EU’s wider engagement with neighboring and enlargement partners. It is intended as an exceptional crisis response instrument and demonstrates the EU’s solidarity with these partners and the support of effective policies.
IMF
The MFA assistance is meant to complement the new program between Moldova and the IMF approved by the IMF Board last month.
Moldova signed an Association Agreement with the EU in 2014.
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