The European Commission will provide Moldova with €100 million in EU aid as the Eastern European country struggles to meet its short-term financial needs. EURACTIV Romania reports.
The Commission has announced that it will give Moldova €100 million under its Macro-Financial Assistance (MFA) programme, with up to €40 million in grants and €60 million in medium-term loans.
Moldova is facing a number of significant challenges, including corruption and bad governance. Economic growth has been slowed due to the negative impact of these factors on public finances.
“This assistance will help Moldova meet its most immediate financing needs and stabilise its economy. At the same time, we are confident that the conditions related to this financing will contribute to improving economic governance in the country and encourage vital reforms,” European Commission Vice-President Valdis Dombrovskis said.
The MFA proposal is still subject to European Parliament and Council approval.
Moldova’s woes have been compounded by weak economic activity in its most important regional trading partners. It still has much to do to counter massive banking fraud that hit its economy back in 2014.
Its rocky path was made slightly more navigable by an Association Agreement with the EU that came into force on 1 July last year. It gave the country’s government in Chișinău access to the European Investment Bank and steps have been taken to modernise the country’s energy infrastructure.
If the MFA programme were to be granted, then payments would be entirely dependent on progress being made under the International Monetary Fund’s own programme in place with Moldova.
Background
Macro-Financial Assistance is an exceptional EU crisis response instrument available to the EU's neighbouring partner countries. It is complementary to assistance provided by the IMF. MFA loans are financed through EU borrowing on capital markets. The funds are then on-lent with similar financial terms to the beneficiary countries. MFA grants come from the EU budget.
The MFA assistance is meant to complement a new programme, approved by the IMF Board on 7 November 2016, agreed between the Republic of Moldova and the International Monetary Fund (IMF).
A previous MFA to the Republic of Moldova, amounting to €90 million, all in grants, was successfully implemented in 2010-2012.