The European Commission is 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, IPN reports.
“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,” said European Commission President Ursula von der Leyen.
The Delegation of the European Union to Moldova said 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. The proposal would accompany the country’s ongoing International Monetary Fund program.
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 favorable financing conditions. The amount is to be disbursed in two additional installments planned for the third and fourth quarters of 2023, provided policy conditions are fulfilled.
“The two additional disbursements under the proposed MFA increase would be strictly conditional on satisfactory progress with the International Monetary Fund program 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 program 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,” the Delegation of the EU noted in a press release.
Macro-financial Assistance is part of the EU’s wider engagement with neighboring and enlargement partners and is intended as an exceptional crisis response instrument. It is available to enlargement and EU neighborhood 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.
Moldova benefits from an ongoing MFA operation which entered into force on 18 July 2022.
