The EU will provide a macro-financial assistance operation of €150 million in the form of loans and grants to benefit the Republic of Moldova. The assistance shall contribute to strengthening Moldova’s resilience in the current geopolitical context, and covering Moldova’s balance of payments needs as identified in the International Monetary Fund (IMF) programme. It intends to support Moldova’s economic stabilisation and reform agenda.
This financial assistance adopted today will help Moldova cover, in 2022-2024, part of its residual external financing needs, which are estimated at USD 480 million. This is in the context of the new IMF programme over the period of 2021-2025.
The disbursement is expected to take place in three tranches to be released between 2022 and 2024. Of the total amount, up to €120 million shall be provided in the form of medium- to long-term loans at favourable financing conditions and up to €30 million in the form of grants.
The Council adopted this decision today. It will enter into force on the third day after its publication in the Official Journal of the EU.
The EU and the Republic of Moldova have developed a close political and economic relationship over the years. Relations continue to develop within the framework of the European Neighbourhood Policy and the Eastern Partnership. Moldova joined the Union’s Eastern Partnership in 2009. An EU-Moldova Association Agreement, which includes the gradual introduction of a Deep and Comprehensive Free Trade Area (DCFTA), entered into force on 1 July 2016.
Moldova’s economic ties with the EU are also well developed. The EU continues to be Moldova’s largest trading partner, accounting for 52% of its total trade in 2020 (approx. 67% of total exports and 45% of Moldova’s total imports), followed by Russia (9%) and China (8%).
Countries that are covered by the European Neighbourhood Policy are eligible for macro-financial assistance (MFA). It is designed to help countries in an acute balance of payments crisis. MFA is provided on an exceptional and temporary basis and is based on economic policy conditions, one of those being that a MFA operation must complement an International Monetary Fund (IMF) adjustment programme.
The Council adopted a previous decision on providing MFA to Moldova in the amount of €100 million in loans on 25 May 2020. The assistance was fully disbursed during 2020-2021.
In view of a worsening economic situation and outlook, the Moldovan government requested a new MFA from the EU on 19 November 2021. The Commission submitted a proposal to this effect to the Council and the Parliament on 4 January 2022.
The long-term EU budget 2021-2027 allows the use of MFA for an overall amount up to €11.6 billion in loans and up to €350 million in grants. The MFA for Moldova adopted today is the second new MFA under the current long-term budget, following the MFA for Ukraine adopted on 21 February 2022.