The Commission is today proposing to increase the ongoing Macro-financial Assistance (MFA) to the Republic of Moldova by up to €145 million, bringing the total amount of ongoing MFA support to the country to up to €295 million. With this proposal, the Commission is standing by Moldova as the country continues to implement its reform agenda, while at the same time facing the fallout from Russia's war of aggression against Ukraine, battling an energy crisis, and hosting a high number of refugees from Ukraine. Today's proposal follows the announcement made by President von der Leyen in Chișinău in November 2022 on additional financial support to Moldova.
The additional assistance aims to provide further support to Moldova, whose economy has been severely hit by the consequences of Russia's invasion of Ukraine, as well as a significant energy crisis continuing since October 2021.
The increase in the MFA would help the country cover part of its additional funding needs in 2023, support macro-economic stability and provide for further reforms. Today's proposal would accompany the country's ongoing International Monetary Fund programme.
The two additional disbursements under the proposed MFA increase would be strictly conditional on satisfactory progress with the International Monetary Fund programme and on the implementation of new policy conditions to be agreed between Moldova and the EU and added to the existing Memorandum of Understanding. These policy conditions would aim to address some of the fundamental weaknesses exposed in recent years in the Moldovan economy and economic governance system, and in other key areas, including good governance and fight against corruption, the rule of law, and energy security. The conditions would be complementary to Moldova's commitments under the programme agreed with the International Monetary Fund and World Bank as well as the EU budgetary support operations, the Association Agreement and the overall objectives of the EU-Moldova relations, further supporting Moldova on its European path.
Out of the additional up to €145 million, up to €45 million would be provided in grants and up to €100 million in loans at favourable financing conditions. The amount is to be disbursed in two additional instalments planned for the third and fourth quarters of 2023, provided policy conditions are fulfilled.
Ursula von der Leyen Commission President, said: “We stand in solidarity with Moldova as shockwaves of Russia's brutal war continue to impact the country. Today we propose to top up macro-financial assistance to Moldova by €145 million. This will greatly support the country's economy and energy security.”
Next steps
It is now for the European Parliament and the Council to consider and adopt the proposal to increase the ongoing Macro-financial Assistance to Moldova. Once adopted, the proposal will enter into force and disbursements can be made.
Background
Macro-financial Assistance is part of the EU's wider engagement with neighbouring and enlargement partners and is intended as an exceptional crisis response instrument. It is available to enlargement and EU neighbourhood partners experiencing severe balance-of-payments problems. It demonstrates the EU's solidarity with these partners and the support of effective policies at a time of unprecedented crisis.
The MFA assistance is meant to complement the ongoing International Monetary Fund programme with Moldova, approved on 20 December 2021 and augmented in May 2022.
EU-Moldova relations
The EU's relations with the Republic of Moldova are based on the EU-Moldova Association Agreement including its Deep and Comprehensive Free Trade Area (signed on 27 June 2014 and which entered fully into force on 1 July 2016), providing for stronger political association and economic integration between the EU and Moldova. The European Council on 23 June 2022 recognised Moldova's European perspective and granted Moldova EU candidate country status.
Moldova benefits from an ongoing MFA operation which entered into force on 18 July 2022.
For More Information
Macro-financial assistance to Moldova
Quote(s)
We stand in solidarity with Moldova as shockwaves of Russia’s brutal war continue to impact the country. Today we propose to top up macro-financial assistance to Moldova by €145 million. This will greatly support the country's economy and energy security.
President Ursula von der Leyen
Russia's relentless aggression against Ukraine is causing significant pain for neighbouring countries such as Moldova, whose economy is suffering badly as a result. Our proposal for increasing grants and loans to Moldova under the macro-financial assistance programme reconfirms the EU’s commitment to the wider region and to Moldova specifically on its road to EU membership. This financing will be subject to conditions, including Moldova’s ongoing fight against corruption, upholding the rule of law and efforts to improve its economic governance.
Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People
We are proposing to double our macro-financial assistance to Moldova, which has been so hard hit by Russia’s war of aggression in Ukraine. This extra support will help the country strengthen its institutions and increase energy security. Today’s proposal sends a further strong signal that we stand in solidarity with the Moldovan people in these incredibly difficult times.
Paolo Gentiloni, Commissioner for Economy
Details
- Publication date
- 24 January 2023
- Author
- Directorate-General for Neighbourhood and Enlargement Negotiations