World Bank Leads Donor Efforts in Helping the New Government Fight the Crisis

October 1, 2009

Moldova’s political transition is settling down. With over 8 months of intermittent electoral campaigns and two parliamentary elections, amidst a deepening socio-economic crisis caused by a substantial drop in remittances and a decrease in exports and VAT-generating imports, Moldova inaugurated a new Government on September 25.

The World Bank has been at the forefront of a broader donor effort to provide the incoming administration with the necessary expertise to get the ball rolling right away. A set of policy suggestions spelling out short and medium-term priorities for the country on a sectoral basis was developed as early as May 2009, but was put on-hold due to a repeat election in July. Taking into account the extent of the current crisis, the notes identify three key areas of Government attention in the short-term: adjusting the budget deficit, ensuring financial sector stability, and protecting the socially vulnerable groups, who are most at risk in times of crisis.

A public launch of the Donor Policy Notes for the Government took place on October 1, to coincide with the Government’s first week in office. A joint press conference with the new Minister of Economy and the Minister of Finance aimed to highlight the country’s state of the economy and provide an opportunity for the donor community to reiterate their full support to Moldova. The next step is hosting a retreat with the entire Moldovan Cabinet to discuss the government’s own anti-crisis plans, followed by a roll-out of Government sectoral anti-crisis measures in the coming weeks. In times of crisis, transparency and accountability becomes ever more important.

" The policies outlined in this document are not meant to be prescriptions but rather suggestions for the Government to consider as it develops its own anti-crisis plan. We are pleased that the government is moving forward rapidly to address the consequences of the economic crisis. The donor community stands ready to support this effort in a collaborative and expedient manner. "

Melanie Marlett

World Bank Country Manager for Moldova

As Moldova is shaken by the crisis, with an estimated 9 percent drop in GDP and a large budget deficit, the World Bank’s response is trying to address pressing issues of the day.

New money was put into rural business creation through the existing Rural Investment and Services Project earlier this year. Additional financing is under way to support Moldovan exporters through provision of credit lines in the framework of the Competitiveness Enhancement Project, and more money is being added to the Moldova Social Investment Fund project, which will generate new jobs in rural areas in addition to local contracts for labor and supplies.

The current crisis has brought new challenges to Moldova’s leaders. Previous shocks included the Russian financial crisis and an import ban on Moldovan wines and fruits – the country’s pride and traditional export. The World Bank in Moldova is working with other development partners to help the new Government weather the impact of the current turmoil and ensure that the most vulnerable are protected.