EU disburses €50 million of Macro-Financial Assistance to the Republic of Moldova

The European Commission, on behalf of the EU, has disbursed €50 million in macro-financial assistance (MFA) to the Republic of Moldova, of which €35 million in long-term loans on concessional terms and €15 million in grants. This is the first disbursement under the new MFA for Moldova, which entered into force on 18 July 2022 and is available for two and a half years. The MFA is part of a larger EU and international donor support to Moldova, to help it weather multiple crises, under the inter-ministerial Moldova Support Platform initiated on 5 April 2022 in Berlin.

Paolo Gentiloni, Commissioner for Economy, said: “The shockwaves from Russia’s brutal aggression against Ukraine are being felt strongly in Moldova, which has shown tremendous solidarity to Ukrainians seeking safety from the war. And today’s disbursement is a further sign of the European Union’s solidarity with Moldova, now a candidate for membership of our community of democracies. We will continue to support Moldova, together with our international partners, to navigate this crisis and create the conditions for a future of prosperity and stability.”

The unjustified Russia’s war of aggression against Ukraine has significantly impacted the Moldovan economy, adding to sizeable pre-existing challenges and imbalances.The pandemic had caused a steep recession in Moldova in 2020, while the gas crisis that began in autumn last year exerted additional budgetary pressures. Despite being among the poorest countries in Europe, Moldova has received the highest per-capita number of people fleeing Ukraine. The ongoing aggression also caused significant trade disruptions, weighing on Moldova’s external position, while surging inflation further undermines the already vulnerable economic outlook.

The MFA should therefore help Moldova address its urgent financing needs and support overall macroeconomic stability. It will also strengthen further reform implementation in several priority areas. Moldova has made commendable efforts to complete all three conditions for the disbursement of the first instalment of the MFA. This included actions related to the fight against corruption and the rule of law, financial sector governance and energy sector reforms to increase the country’s energy resilience.

Moldova also continues to satisfy the pre-conditions as regards respect for human rights, effective democratic mechanisms and the rule of law as well as having a positive track record in implementing the ongoing IMF programme.

The Commission will continue to work closely with Moldova to ensure further implementation of the MFA programme.

Background

Macro-financial assistance (MFA) operations are part of the EU’s wider engagement with neighbouring countries and are intended as an exceptional EU crisis response instrument. They are available to EU neighbourhood countries experiencing severe balance-of-payments problems. In addition to MFA, the EU supports Moldova through several other instruments, including budget support, thematic programmes, technical assistance and blending facilities to support investment.

In response to the ongoing aggression against Ukraine, the EU supported Moldova via different forms of assistance, including the MFA as well as i) planned additional budget support of €75 million under the State Building and Resilience Contract; ii) €8 million in humanitarian assistance to support safe border crossings and to ensure basic living conditions for refugees currently in Moldova; iii) €15 million to support the dignified and efficient processing of refugees and the secure transit and repatriation of third-country nationals; iv) €15 million to support the EU Border Assistance Mission (EUBAM).

Moldova Support Platform

The Ministerial Conference that took place in Berlin on 5 April 2022 marked the launch of the Moldova Support Platform (MSP) – an inter-governmental instrument meant to help the country overcome the sizeable challenges stemming from the ongoing Russian invasion of neighbouring Ukraine. A follow-up conference on further support to Moldova was organised in Bucharest on 15 July. Until now, the international and bilateral donors pledged some €1.3 billion of additional assistance to Moldova under six priority areas.