Financial Turmoil and a Transport Crisis: The Challenges Ahead for the Government

The economically oriented government has begun its work under difficult conditions, driven by the urgent need to adopt next year’s budget and to remedy the failures of its predecessors

Alexandru Munteanu’s “dream team” has been formed, is holding meetings, and is actively engaging with the media. Pro-government commentators are calling on the public and the business community to give the new cabinet 100 or even 300 days free of criticism so it can demonstrate its capabilities. Above all, concrete results are expected from them – economic growth, increased investment, and higher purchasing power. The false start, in the form of the decision to close the Russian Center for Science and Culture in Chisinau, as well as the renewed denouncement of CIS agreements, can be viewed as routine work aimed at implementing the country’s anti-Russian and pro-EU course. Such steps do not contribute to trade or investment, but Maia Sandu’s ideological commitments and obligations to the European Union remain firmly in place. A far more serious challenge was the cancellation of the final tranche of the International Monetary Fund credit line – 170 million US dollars (about 3 billion lei). This, in one way or another, is the responsibility of the previous government and is linked to its reluctance to take certain spending-cut measures during the pre-election period. The IMF has also raised objections regarding insufficient anticorruption efforts, including the lack of operational independence of the Anticorruption Prosecutor’s Office (Moldovan authorities are well aware, looking at Kyiv’s example, of the potential consequences of having fully “independent” anticorruption bodies). In December, the IMF will send a new mission to Moldova, and it will now directly depend on Alexandru Munteanu and the cabinet whether the next cooperation program is drawn up and what its conditions will be. There should not be any major surprises: similar programs have been extended annually over the past 10 years. The last scandal occurred back in 2015, was linked to banking fraud, and was resolved relatively quickly. Without IMF loan funds, PAS will find itself facing a certain liquidity deficit (according to Parliament, the Fund’s lending terms – interest rate and maturities – are financially advantageous). However, it will gain more freedom in economic and budgetary planning, with its only obligations being those to Brussels within the framework of EU accession negotiations. The adoption of the 2026 budget, which the government is legally required to present and approve by the end of this month, is in fact the top priority for Alexandru Munteanu in the near term. And his team still has plenty of work to do on this front. It is already known that the population will continue receiving compensation for utility payments in the coming year, although these subsidies will be significantly reduced. At the same time, an increase in budget expenditures is expected (driven mainly by higher capital and infrastructure investments), along with a rise in revenues. The chair of the parliamentary committee on economy and finance, Radu Marian, has warned that the main taxes (VAT, income tax, and social contributions) will not be raised in 2026; only excise duties on certain categories of goods will increase. A new tax policy is set to be adopted in 2027. Until then, the plan is to boost revenues through expanded trade and business incentives, as well as improvements in administrative capacity, including the use of modern software solutions. The Ministry of Finance’s budget forecast for 2026-2028 projects revenue growth of over 10% next year, that appears difficult to achieve amid a predicted decline in external subsidies (grants). At the same time, the budget deficit will also continue to grow and will exceed 20 billion lei (5% of GDP), as expenditures are set to increase by 6.7%. According to the Finance Ministry’s plan, these funds will be directed toward revitalizing the economy – supporting businesses, agriculture, and the development of infrastructure, including energy and road systems. There has been a great deal of discussion around the issue of the minimum wage, which has been set at 5.5 thousand lei for 2025. Member of Parliament and former Minister of Finance Victoria Belous stated that it will be raised in the 2026 budget, but did not provide any details. According to the National Trade Union Confederation, which refers to the average wage in the economy and EU legislation, the minimum wage should be increased immediately to 8.05 thousand lei. The National Employers’ Confederation strongly opposes such a leap, arguing that it would be too burdensome for businesses, and agrees only with an increase of 500 or 1,000 lei. Given that the current budget provides for an increase of 500 lei (from 5 thousand), one must acknowledge the justification for a more cautious, conservative forecast. Debating the budget in Parliament, given the PAS majority and the opposition’s passivity, focused mainly on distancing itself from accusations of ties to Moscow, does not pose any problems. However, the government will have to adopt a balanced and well-justified document and operate under conditions of constant deficit and a worsening public debt situation. Even the Ministry of Finance’s optimistic forecast suggests that a reduction of the budget deficit (to 18.5 billion lei, or 4.2% of GDP) can be expected only in 2028. Moreover, unlike the budget, which is legally binding, the forecast is largely a guideline and a financial-analytical document. Alexandru Munteanu finds himself in a situation where his government has neither the time nor the realistic financial and administrative tools to develop and adopt a development-oriented budget. All preparatory work has long since been carried out by the relevant ministry under the previous minister, while the key decisions will be made by the president’s office. The privatization of state assets could help balance the main financial document over the next few years. However, no advantageous deals are visible on the horizon. PAS has decided to undersell a strategic asset in the Giurgiulesti port, relying solely on geopolitical motivations. Romania (the Port of Constanta) is set to pay around 62 million USD for the operator ICS Danube Logistics, although Chisinau had received more commercially favorable offers. Moreover, several Moldovan politicians claim that transferring the asset into Romanian ownership, for whose Black Sea ports Giurgiulesti is a competitor, may lead to the asset’s mothballing or even liquidation. If this is the case, then the damage to the state caused by lost tax revenues and higher logistics costs would, within a year or two, outweigh the modest value of the transaction, which does not even include concrete commitments regarding management or investment. Munteanu and his ministers have likewise refrained from commenting on the persistently dire situation of the state-owned enterprise Moldova Railways. Every government has announced plans to reform it by dividing its assets (for example, separating the profitable freight-transport operator from the loss-making segments such as passenger services and infrastructure maintenance) and then partially or fully privatizing these divisions, which would subsequently allow the state to reduce expenditures. However, at present there is not even a plan to repay salary arrears to employees; all passenger routes operate solely for reputational purposes (with no financial viability), and freight transport lacks stability due to the absence of proper dialogue with partners and the critically poor condition of both the railway tracks and rolling stock. Nevertheless, the 2026 budget will almost certainly include increased spending on transport infrastructure, including road repairs, since during recent electoral periods this sector was repeatedly downsized to offset social payments aimed at boosting PAS’ ratings. Transport connectivity, even amid geopolitical instability, remains a key precondition for economic growth and the country’s overall welfare. Whether Alexandru Munteanu’s government will be able, through budgetary decisions and direct administrative measures, to revitalize this strategic asset, and whether it will have 100 or 300 days to do so, will be revealed in practice.