Brussels, 11/10/2006 (Agence Europe) - On Monday 9 October, the European Union proposed to provide €45 million macro-financial assistance to Moldova. The EU aid, which must also be approved by the two arms of the budgetary authority, the Council and Parliament, is to help Moldova alleviate the financial constraints on the implementation of its economic programme. It will also facilitate and encourage the authorities' efforts to implement reforms under the EU-Moldova European Neighbourhood Policy Action Plan and the Economic Growth and Poverty Reduction Strategy Paper.
The proposed micro-financial aid will be “exceptional”, limited in time (2007 and 2008) and conditional on progress in the implementation of the International Monetary Fund (IMF) supported Poverty Reduction and Growth Facility (PRGF). EU aid to Moldova will complement support from the Bretton Woods Institutions (IMF and World Bank), bilateral donors and the Paris Club.
The Community funding will be used to support the balance of payments and build up the reserves of a country trying to implement an ambitious programme of economic reform. The Commission points out that, since the beginning of 2006, Moldova has been facing additional balance of payments shocks - a decision by Gazprom, which holds the monopoly on Russian gas, to increase the gas prices it charges Moldova and a ban on Moldova's exports of wine and alcohol to Russia - “that make the prospects of achieving the objectives of the PRGF programme extremely weak”. In addition, Moldova's external accounts are weakening. The Commission believes that the EU macro-economic aid will “contribute to meeting Moldova's external financing requirements in 2007 and 2008”. (lc)