The IMF’s New Program Exposes Moldova’s Economic Fragility

Last week, following another meeting with the IMF mission, the government agreed on the terms of a new three-year program. Official statements were presented with the usual optimism about “sustained economic growth”. However, behind these vague formulations lies a harsh reality that is being carefully concealed from the general public

In reality, the new IMF program is not a sign of success but, on the contrary, an acknowledgment of the serious crisis into which the country has fallen after five years of PAS rule. First and foremost, it is telling that this time the authorities did not agree on a classic loan, but on a so-called Policy Coordination Instrument without direct financing. In essence, this amounts to the establishment of external oversight over the state’s economic policy, reflecting growing mistrust by international lending institutions in the country’s ability to function as an independent economic manager. Let us start with the numbers – they are more revealing than any statements from the ruling party’s spokespersons. According to IMF projections, Moldova’s economic growth in 2026 will slow to 1.5%, while average annual inflation is expected to rise to 8.1%. In simple terms, real household incomes will continue to shrink. And this is happening in a country that confidently proclaims its “historic move toward Europe”, sets ambitious timelines for integration, and whose president spends weeks travelling across Europe collecting prestigious awards. Particularly alarming is the forecast for the current account deficit – more than 22% of GDP. This indicates a chronic dependence of the economy on external sources of financing. We are consuming significantly more than we produce, and the imbalance is being covered through loans, grants, remittances from migrants, and donor assistance. After the United States and the European Union reduced direct non-repayable funding to Moldova in 2024-2025, the country faced a significant budget deficit, which has been covered mainly through borrowing. At the same time, cooperation with the IMF effectively stalled during this period, and as a result, the final tranche of around $170 million under the program that ended in October 2025 was not disbursed. Thus, the new three-year program, whose negotiations are being presented as a “major success”, is in fact merely an attempt to recover from the collapse of the previous one. Following its partial failure, it was easy to anticipate that the Fund’s mission would bring much stricter conditions to Chisinau. In the context of the current failing economic model, the government is forced to take out loans on a continuous basis, not for development purposes, but to refinance old debts. The formula is simple – borrowing from Brussels or the IMF in order to repay those to whom money was owed from the previous year. For example, between January and September 2025, Moldova’s external public debt increased by more than $500 million, or 13.27% (reaching a total of $4.746 billion). At this pace, the debt-to-GDP ratio could approach 40% already this year. However, PAS appears to view these figures with philosophical calm, since, ultimately, it will clearly not be them who have to deal with the consequences. However, operating in a state of constant “financial resuscitation” inevitably leads to a situation where any reduction in external funding risks triggering serious fiscal problems, and even difficulties in budget execution. Incidentally, the IMF itself does not really conceal the fact that the new program is not about development, but about so-called “macroeconomic stability strengthening”. In other words, translated from economic jargon into plain language, it is about “keeping things afloat”. The only question is: who needs this stability, and for what purpose, if it does not translate into higher wages, lower prices, new jobs, or a halt to the country’s demographic “bleeding”? It is also impossible to ignore how the rhetoric of international institutions toward Moldova has changed. If a few years ago cautiously optimistic assessments prevailed, today there is an increasingly frequent focus on vulnerability, uncertainty, risks, and the need for strict discipline. Having failed in economic policy, PAS, in order to secure additional credit injections, will be forced to accept highly painful conditions. These include cuts in social spending, higher tax burdens, limits on budgetary programs, and other austerity measures. It is clear that these measures will first and foremost affect ordinary people, rather than the “efficient managers” of the current government. Paradoxically, PAS, which came to power under slogans of efficiency, reform, and anti-corruption, has led the state into a growing debt trap, near-total loss of economic self-sufficiency, and a pathological dependence on external financing. We are close to the point where it will become necessary to coordinate the main elements of economic policy with donors: from budget parameters to the tax system. Moldova entered the current crisis with a chronically weak economic base, deep deindustrialization, large-scale labor migration, and critical dependence on imports. The root cause lies in the fact that over recent years no coherent economic development strategy was ever put in place. Instead of launching major industrial projects or stimulating business activity, the authorities allowed the closure of certain large enterprises and, with them, an outflow of investment resources. The entire strategy was based on external borrowing and political support from the West. In the short term, this approach helped avoid a financial collapse, but in the long run it created a model of managed dependency that is now approaching its tragic conclusion. Falling living standards, industrial decline, a lack of jobs in the national economy, and high inflation are creating increasingly intolerable conditions, forcing the most active and able-bodied citizens to leave the country in large numbers. As a result, European integration, presented as a solution to demographic and economic problems, risks becoming the culmination of a failure, whereby citizens will finally obtain a legal instrument for what they have been doing for years anyway: leaving faster and, in many cases, permanently. Amid the wide range of bleak forecasts, experts are asking a fundamental question: is the current government capable of offering the country any coherent economic development model at all? Unfortunately, specialists’ answers in this case are discouraging. As the experience of the past five years has shown, PAS lacks both the personnel and the ideas required for economic state-building. The political leadership demonstrates high levels of activity in foreign policy, while domestically it is engaged only in managing a permanent crisis and maintaining the minimal viability of a “doomed patient”. Even by Soviet-era standards, the republic is objectively not poor in terms of potential. But unlocking that potential requires a well-designed strategy, qualified administrators, and political will – precisely the elements that the current leadership appears to lack. Ultimately, by 2026 Moldova has become a state with limited economic sovereignty and a constant need for credit support. The IMF-aligned program should therefore be seen as a warning signal that, without external assistance, the country is no longer capable of maintaining its balance independently. And what is the bottom line? Having proclaimed a course toward independence, modernization, and European integration, Maia Sandu and the parliamentary majority loyal to her have effectively brought the country to a point where its stability depends entirely on the generosity of foreign creditors.