The data presented at yesterday’s meeting of the Moldova Support Platform revealed a depressing picture of the national economy’s state, which apparently cannot survive without serious external injections
The Moldova Support Platform, set up at the initiative of Germany, France and Romania last year, met for the fourth time in Chisinau yesterday. Representatives of more than 30 states and international organizations came to the summit to once again “write out a cheque” for Moldova to maintain stability, infrastructural development and increase energy efficiency.
The first meeting of the platform took place on 5 April 2022 in Berlin. Its activity was actively supported by the European Union, the USA, Canada, Japan and leading international financial institutions. As a result of the previous meetings held in Berlin, Paris and Bucharest, Moldova received significant material and financial support, which allowed closing budget gaps, compensating the population for high energy tariffs and helping farmers.
However, amidst statements about the volume of aid, which amounted to hundreds of millions of dollars and cumulatively made up a very substantial figure, it became clear at the end of the year that something went wrong. Either someone is bad at arithmetic, or our development partners do not hesitate to come to every meeting with the same financial package. Thus, in Berlin, we were promised 600 million euros of direct budgetary support, including loans. In summer in Bucharest, the total amount also approached the same 600 million euros. And in autumn in Paris, French President Emmanuel Macron announced an allegedly additional tranche of 100 million euros for the purchase of gas and electricity.
Later, however, it became clear that there would be no separate French payment, and the decision announced by Macron was nothing more than a collective commitment of all platform participants. Judging by the fact that no one ever mentioned this sum again, it is likely that the matter never went beyond words. That is why our authorities tried to somehow smooth over the embarrassment by calling not to measure everything by money, because “there are different forms of aid”. But, as they say, the bitter taste of European populism has not gone away.
This time, based on the calculation of the announced figures and the signed financing agreements, things were somewhat better, and Moldova will not be left without money in the coming winter. Thus, Moldova expects to receive again several hundred million euros from international partners and donors for the development of key sectors, such as the energy sector, as well as to keep on with implementing the reforms needed to prepare for the EU accession.
The current government was certainly pleased with this kind of successful crowdfunding. Therefore, judging by the proposals of Prime Minister Dorin Recean, the government intends to “build on the success” and turn the platform into a kind of “Solidarity Fund”. In general, at least, there will be no shortage of names - for example, the German Foreign Minister proposed to transform the collegial format of Western assistance to Moldova into a permanent Strategic Cooperation Platform.
All this optimism was to a great extent overshadowed by the prime minister’s speech, from whom, perhaps for the first time, we could hear that the real situation in the Moldovan economy is extremely depressing. It turned out that last year it shrank by 6.5%, and in 2023 it will shrink by another 2.2%. At the same time, the inflation rate remains high, and the overall forecasts are quite negative. All of this together has led to a budget deficit of 100 million euros this year, while in 2024 this figure will increase to 400 million euros. Such revelations, to be honest, are dissonant with the statements of the country’s leadership and high-ranking officials that Moldova’s economy is expected to grow and stabilize soon.
It should also be noted that this time the authorities decided not to keep silent over the promises of untold amounts of aid, but to take the initiative and voice their priority needs. This indirectly indicates the deplorability of the current situation, which does not allow to passively let everything go and requires much more effort to keep the state and the living standards of the population afloat.
Thus, Infrastructure and Regional Development Minister Andrei Spinu, who introduced the country’s infrastructure renovation plan at a meeting of the platform, said that Moldova needs immediate investments in the construction of roads, ports, airports, water supply and sewerage systems. At the same time, the total cost of the programme is about 15 billion euros, and in order to achieve success, according to Spinu, it is necessary to look for sources of financing and launch projects now.
The Minister of Energy has an equally good appetite. According to Victor Parlicov, for the coming years Moldova needs at least €15 million for residential energy efficiency and €20 million in grants to invest in energy poverty alleviation for vulnerable consumers to help them change their household electrical equipment. In addition, starting in 2025, the state will need about €100 million a year in loans to invest in improving the electrical efficiency of buildings, for a total investment of €7 billion, he estimated, and that’s just for public institutions.
Of course, it is not by chance that this event was held just three weeks before the local elections. So, all statements and Napoleonic plans should be viewed, first and foremost, in terms of the protracted electoral period. And the main task now is not so much to give real and particular figures of aid, as to demonstrate broad international support for the ruling party, despite a lot of complaints from citizens. Obviously, many in the EU know that the moods in the Moldovan society are quite heterogeneous, and no one can exclude alternative variants of development and voting results. This, in turn, may become the moment of truth to understand who European friends are actually helping – the people of Moldova or solely loyal political forces.
According to open sources, huge amounts of monetary aid came to the republic from abroad over the past two years, but, to put it mildly, had no effect on the living standards of the population. Given the data voiced by Dorin Recean, which in reality are probably even more deplorable, we must assume that all the foreign funds went to support the current expenditures of the state, which is no longer able to generate revenues and cover the budget shortage. It is already obvious that in recent years Moldova has been firmly addicted to the external finances and has become completely dependent on foreign monetary sources.
In any case, the above event was definitely useful for both experts and citizens, who were given a little insight into the real state of affairs in the country. If you look closely at the sums that were announced by only two ministers, the state and its infrastructure are almost on the verge of collapse, making the most of Soviet buildings. There is also no doubt that the authorities are carefully hiding the dismal state of the economy, which apparently cannot survive without serious external injections.