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European Union approves EUR 30 million disbursement in macro-financial assistance to the Republic of Moldova

10.07.2020   2404 Views  

This is the second and final disbursement of the current macro-financial assistance program for Moldova, the first installment worth EUR 30 million being granted in October 2019. The second disbursement consists of EUR 10 million in the form of a grant and EUR 20 million in the form of a low-interest, long-term loan. The program is intended to assist Moldova in covering its external financing needs, which is particularly important in the context of the coronavirus pandemic, while implementing a wide-ranging and ambitious reform agenda.

Paolo Gentiloni, Commissioner for Economy, said: "Today, the EU has approved a further EUR 30 million in financial assistance to help Moldova cope with the economic shock caused by the coronavirus pandemic. The European Union stands by the citizens of Moldova in these difficult times. I would also like to congratulate Moldova on its efforts to carry out reforms, such as improving the justice system and fighting corruption."

The disbursement aims at fulfilling the political commitments agreed with the EU, as stipulated in the Memorandum of Understanding. These included important measures in the field of governance of the financial sector, public sector, the fight against corruption and money laundering, energy sector and business climate and the implementation of the Deep and Comprehensive Free Trade Area (DCFTA).

The installments of the macro-financial assistance are conditioned by a significant progress in the IMF programs. Moldova has successfully completed the sixth and last revision of the IMF's Extended Credit Facility for three years and of the Extended Fund Facility from March 2020.

Macro-financial assistance disbursements are also conditional on the fulfillment of certain political preconditions. The Commission and the European External Action Service (EEAS) consider that there has been made sufficient progress to this end, in particular as regards the series of specific short-term actions communicated by the EU to the Moldovan authorities in February, related actually to justice, anti-corruption, media and civil society. The Moldovan authorities have also pledged to continue the justice reform, in particular by presenting the long-awaited constitutional changes for judicial reform, in line with international standards. Therefore, taking into account these efforts, The Commission and the EEAS consider that the political preconditions for granting the second installment of macro-financial assistance have been met. The Commission and the EEAS monitor the fulfillment of these preconditions throughout the life cycle of macro-financial assistance programs.

Separately, the EU provides Moldova with other macro-financial assistance loans amounting to EUR 100 million, as part of the decision to provide macro-financial assistance to ten partner countries to help them limit the negative economic effects of the coronavirus pandemic. The Commission is ready to provide the first installment of this macro-financial assistance as soon as possible, following the legal adoption of the Memorandum of Understanding with the Republic of Moldova. The Memorandum of Understanding sets out the political actions to be taken in return for the aid.

Macro-financial assistance operations are part of the EU's broad engagement with neighboring countries and are intended to serve as an EU crisis response tool. They are available to the EU's neighboring countries, which face serious balance of payments difficulties.