Can Moldova Endure Four More Years Under PAS?

Despite PAS’ honey promises of an imminent economic boom in its electoral program, the current economic reality of Moldova, shaped by the past four years of “yellow” rule, is marked by near-zero growth, a decline in exports and real-sector production, rising public debt, and a host of other problems

Semyon ALBU, RTA: Against the backdrop of its parliamentary election victory, the ruling regime finally decided to publish the GDP growth statistics for the second quarter of this year, which it had previously withheld until election day in violation of established deadlines. Contrary to expert expectations, there was even some growth – 1.1%. In her excitement, Minister Doina Nistor proclaimed these to be “encouraging figures” and a “sign of economic recovery”, insisting that the economy would continue moving in a positive direction. I think it’s worth taking a look at how the “yellows” actually envision the benchmarks for economic development over their next four-year term. A glance at PAS’ electoral program reveals a number of lofty promises. For instance, among its strategic goals are doubling household incomes, doubling the volume of Moldova’s goods and services exports, and repairing and building thousands of kilometers of roads. In the latter case, at least, they honestly admit that this is to be done at the EU’s expense. Furthermore, the economic section outlines a target of reaching 5% annual growth by 2027 and doubling GDP within ten years – though, as colleagues have already fairly pointed out, it’s unclear how this aligns with the goal of doubling incomes by 2030. Still, they are already prepared to mislead us with ill-considered tricks. In addition, the program promises protection for local producers, the attraction of foreign direct investment, and the implementation of numerous infrastructure projects. There is also a pledge to develop green energy and stabilize gas and electricity prices through “long-term contracts at favorable rates with reliable suppliers”, but what was stopping them from doing that earlier? Finally, in the agricultural sector, the plan envisions integrating Moldovan farmers into the EU market by increasing production volumes, adopting European standards, and boosting agricultural exports. Looking at this rosy picture, one is immediately reminded of the saying: “the devil is in the details”. Take the much-touted 1.1% “jump” in the second quarter, for instance. It followed almost the same decline of 1.2% in the first quarter. In reality, if we add up the results for the first half of the year, we basically stood still. Compared to last year, there has been no growth at all. This amounts to yet another lost year for the national economy under PAS. Moreover, this pessimism is shared by key international financial organizations, which in recent years have consistently forecast GDP growth for us, only to be forced time and again to revise their projections downward. Even these meager current results were largely achieved thanks to government investments, which were relatively generously allocated during the pre-election period. There are also a few other areas showing at least some positive trends, such as the services sector, particularly IT. But as much as Radu Marian might wish otherwise, the entire country cannot be carried by IT alone – producing and supplying “apples”, so to speak, would also be beneficial. The real problem lies in the real sector of the economy. Thus, agriculture and the processing industry continue their steady slide into decline. Both sectors have once again recorded negative results. Exports of goods fell by as much as 20%, reflecting the ongoing stagnation of domestic production, while imports have risen yet again. As a result, it comes as no surprise that we are facing a record trade deficit –specifically, 4 billion dollars, which is a billion more than last year. Economists point out that the country has never before seen such a low ratio of exports to GDP. If in the 2000s exports averaged 36% of GDP, and in the 2010s around 23%, today the figure has dropped to just 15.3%. Vladimir Golovatiuc also highlights another related issue – the deficit of Moldova’s current account balance, which continues to surge ahead and has exceeded one billion dollars for two consecutive quarters. By comparison, over the past five years it was, on average, 2.5 times smaller. According to Golovatiuc, in the first half of the year the average deficit reached more than 23% of GDP, whereas risks of financial and economic instability are thought to increase already at the 5% mark. What does it mean? Put simply, that we are living beyond our means. We earn little, and with each passing year even less, yet we keep spending more and more. This explains the rapid growth of the budget deficit and the rise in public debt. In August it reached 4.7 billion dollars, nearly doubling in just four years. Thus, the current “stability”, which merely masks chronic and worsening problems, is sustained solely by external partners generously sponsoring the ruling regime. But everyone understands that this is a dead-end path: it is impossible to keep piling up debt indefinitely, since at some point servicing it will become an unbearable burden. Upstanders of the government might argue that PAS is not to blame, that circumstances are to blame. They can point to the geopolitical situation, various crises, and, of course, Russia. Fine, let’s assume you cannot boost the economy due to objective reasons. But what prevents you from at least creating proper legal and bureaucratic conditions for a favorable business climate, when you hold in your hands all the levers of governing the country? The gray-and-corrupt schemes have simply changed owners and are flourishing quite well. The judiciary still cannot be “reformed”, and once again we are being fed tales of new years of a “fight for justice”. Administrative procedures remain anything but transparent, just recall the tenders for commercial spaces at the airport. Nepotism continues to be the norm in our business life, rather than laws and the principles of fair competition. By the way, all these arguments are taken from the current report on Moldova’s investment climate authored by the U.S. Department of State, which can hardly be accused of serving Russian propaganda. What prospects do we have for the future? At the moment, they certainly do not look bright. For now, all the problems are patched up with external grants and loans, taking advantage of the fact that, due to the war in Ukraine and the geopolitical conflict between the West and Russia, the European Union finds it important to keep Chisinau afloat in order to maintain it within its sphere of influence. That is why, for every economic misstep, there is always a helping hand extended from Brussels, that was vividly demonstrated, for example, earlier this year during the energy crisis. But such a model cannot last indefinitely. And therefore, whether the country can withstand another four years of governance by a party that has largely failed in the field of economic development is far from a rhetorical question.