Moldova to Resume Negotiations with Russia on a Loan of €200 Million

At a meeting on July 31, the Moldovan government approved the start of negotiations with the Russian Cabinet of Ministers on a € 200 million loan. The head of the Ministry of Finance Sergiu Puscuta recalled that “the state budget for 2020 provides for a loan of € 200 million as a budget deficit financing source.” We will remind, earlier the government of Ion Chicu reached an agreement with Russia on obtaining a loan of € 200 million. But on May 7, 2020, the Constitutional Court of Moldova ruled that the agreement on a Russian loan contradicted the Constitution. The court noted that obligations of the parties in the agreement were unequal. Thus, the Russian side is obliged to issue a loan of up to € 200 million, and the Moldovan side has six obligations: to return the money at 2% per annum, pay a penalty for late payment in the amount of 150% of 2%, ensure that joint projects in Moldova are implemented by Russian companies, provide they have favorable conditions, to pay overdue debts and interest thereof, including on private companies’ loans approved by the Moldovan side to the Russian banks, to pay the consolidated debt to the Russian Federation at the request of the Russian side.