REPUBLIC OF MOLDOVA

Moldova is a parliamentary republic, as stated in the Constitution of 1994. The parliament consists of a single chamber of 101 members, elected by universal suffrage for four years. Since 2016, the president, the head of state, is directly elected by universal suffrage for four years (previously, the president was elected by the parliament) for four years. The prime minister is nominated by the president in consultation with the parliamentary majority.

Moldova is a unitary country with a two-tier subnational government system. Decentralisation and local government’s autonomy are enshrined in the 1994 Constitution (Art. 109). According to Article 110, the territory is divided into cities, villages, districts and the autonomous territorial unit of Gagauzia. The decentralisation process in Moldova has been uneven and inconsistent. In 1994, changes to the soviet system of administrative organization were made, but the territorial structures remained mostly unaltered. Subsequent to the adoption of the European Charter of Local Self-Administration in 1997 and wanting to conform with European Standards, a new territorial structure and division of resources and competences were established in 1998, which followed the Romanian model.

In December 2001, the newly-elected communist government started another round of administrative-territorial reforms which restored a quasi-Soviet model of territorial division of authority, and local autonomy was reduced. Several laws were passed, such as the 2003 Law on Local Public Administration and the 2003 Law on local public finance (no. 397-XV, amended in 2013) and the Law on administrative decentralisation 435/2006. One of the most important law is the 2006 Law on Local Public Administration (no. 436-XVI, amended in 2012). It acts as a code for the local administration system and regulates the organisation of subnational governments, their competences, their internal administration, the forms of control over their activities, their property and financial resources, and the forms of associations and co-operation.

After a political crisis which lasted between 2009 and 2010, a new phase started in 2012, with the launch of a National Decentralisation Strategy and Action Plan for 2012-2015, aimed at addressing the fiscal, financial and management challenges which resulted partly from the high-fragmentation of the first-level government units, and partly from the insufficient institutional and administrative capacity. This strategy covered a large array of topics, including decentralization of competences and skills; financial decentralization; patrimony decentralization and local development; subnational government’s administrative capacities; local democracy and gender equality. A pilot implementation started in 2014, and was later extended until 2018. However, the Strategy had little overall implementation according to various estimates (up to 50% according to official estimates, and even lower based on estimates from the Congress of Local Authorities from Moldova).

According to the Evaluation Report published in 2018 (Implementarea Strategiei naţionale de descentralizare, discutată în cadrul Comisiei administrație publică) on progress of the implementation of the National Decentralisation Strategy, the most important policy documents and the main commitments on decentralisation and local self-government have expired, and have remained largely unimplemented. However, the most valuable achievement of the National Decentralisation Strategy is the amendment of the law no. 397 on Local Public Finances, which introduced general and special purpose transfers for subnational governments as well as general tax-sharing principles, subsequently to the fiscal capacity principle.

In 2020, the Council of Europe presented a Draft of the Action Plan for Moldova 2021-2024, which, among other measures, proposes better processes of inter-municipal cooperation and citizen participation at the local level, as well as improved dialogue and consultation mechanisms, in accordance with European standards.

TERRITORIAL ORGANISATION
MUNICIPAL LEVEL	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (2021)
53 Cities (orase) 13 Municipalities (municipii) 832 Communes or villages (sate)		32 Districts (raions) 2 Municipalities (municipii) 1 Autonomous territory of Gagauzia
Average municipal size: 2 918 inhabitants
898		35	933

OVERALL DESCRIPTION: Moldova has a complex territorial organisation that results from a series of administrative-territorial reforms that took place between 1994 and 2002. It is worth noting that there is one unrecognised territorial unit (Transnistria) that does not consider itself subject to the jurisdiction of Moldova.

Currently, based on the 2002 Law on the Territorial-Administrative Structure, the administrative and territorial organization of Moldova, apart from the Autonomous Territorial Unit of Gagauzia (ATUG), is based on two levels: (i) a first-tier of local governments composed of villages or communes (sate) and cities (orase), including those with municipality status (municipii); and (ii) a second-tier made of districts (raions) and Chisinau and Balti municipalities. There are no hierarchical relations between subnational governments of the first and of the second tier.

REGIONAL LEVEL: The regional level consists of 32 districts (raions), two municipalities (Municipii of Chisinau and Balti) and one autonomous territory (Gagauzia). At the district level, the governing body is the district council (Counsiliul raional) whose councillors are elected by universal suffrage for a term of four years. The district council elects a president (presedinte) for four years as well as an executive body called the district chair's office.

The two special municipalities of Chisinau (the capital) and Balti have a dual status, municipal and regional, and carry out responsibilities of both levels. In addition, Chișinău has a special status as a capital city regulated by a new law adopted in 2016. Besides the city itself, the municipality comprises 35 other suburban localities: six cities and 12 communes.

Gagauzia is an autonomous region by way of special statute. It has its own assembly, the Gagauzian people’s assembly, which enjoys law-making powers within its own jurisdiction. Gagauzia is governed by a governor who is elected by direct universal suffrage for a period of four years. The permanent executive power is exercised by an executive committee.

MUNICIPAL LEVEL: The local level comprises three main types of local governments: 53 cities (orase), 13 municipalitites (municipii) and 832 communes or villages. They can comprise localities, at the sub-municipal level, that are not self-governing (there were 1 682 localities in total in 2020, from which 597 are administratively part of either cities or communes).

Towns are designated as “municipii” on account of their special economic, socio-cultural, scientific and administrative significance to the country. The municipal governing body is the local council (consiliu local) made up of councillors elected via universal and direct elections for a four-year term and the mayor (primar), seconded by the mayor's office (primarie), also elected by direct universal suffrage for four years. In Chișinău, the mayor is called “mayor general”. The localities that are part of the capital city have their local city halls and councils, who act under the coordination of the municipal council.

The Moldovan local system is fragmented. The average size of municipalities is 2 704 inhabitants, versus 5 959 on average in the EU in 2020. According to the Law on the Territorial-Administrative Structure, a municipality must reach a minimum population size of 1 500 inhabitants before it can form a local government, but there are many exceptions. There is no policy promoting mergers but instead municipalities are encouraged to cooperate amongst themselves.

HORIZONTAL COOPERATION: Inter-municipal cooperation is poorly regulated, but discussions are currently ongoing at the Parliament on this topic. Local governments can cooperate on regulatory functions, community services (e.g. education and social services), public utilities and infrastructure (e.g. water and sewerage), general administrative functions (human resources, local financial management, procurement, etc.). They may sign contracts and agreements, create joint, single- or multi-purpose functional enterprises, or create associative bodies with independent legal “personality”, in the aim of enhancing integrated territorial cooperation.

STATE TERRITORIAL ADMINISTRATION: The central government has deconcentrated authorities subordinated to ministries whose functions are regulated by the 2016 Government Regulation no. 266. Following the adoption of the Law on Regional Development in the Republic of Moldova (2006), five development regions were set up. They do not represent administrative jurisdictions and are mostly used in the context of planning, evaluating and implementing regional development policies.

Subnational government responsibilities are not laid out by the constitution, but they are identified in different laws, including law no. 436-XVI on Local Public Administration, law no. 435-XVI on Administrative Decentralisation and the Law on Public Finance. Subnational governments have two types of responsibilities: delegated and exclusive. According to the law, all first-level local authorities have the same set of responsibilities, irrespective of their size, institutional, administrative or fiscal capacity. Local governments of the second tier have almost the same competences as those of the first tier, but adjusted to their territorial scale, as well as additional competences in specific areas, such as social protection. At the regional level, the only case of asymmetry in terms of functions is the “special autonomy” of Gagauzia.

In practice, the assignment of responsibilities between the regional and local level is imprecise, as well as between subnational governments and central government entities or state-owned enterprises. In particular, the delimitation of the competences among the first and second level authorities is unclear, contradictory, and in some cases even lacking.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Regional level	Municipal level
1. General public services (administration)	Internal administration; Participation to the coordination of 1st- tier local councils’ activities	Internal administration; Local property management
2. Public order and safety		Fire protection
3. Economic affairs/transports	Regional roads; Regional public transport; Economic development support; Energy	Local roads; Local public transport; Local gas and heating distribution
4. Environment protection	Protection of natural resources.	Waste management; Sewerage systems.
5. Housing and community amenities	Spatial planning.	Urban and spatial planning; Water supply; Parks and green spaces; Street lighting; Cemeteries; Social housing; Public sanitation
6. Health
7. Culture & Recreation	Sports; Youth programs; Theatres; TV stations; Libraries and other cultural institutions.	Libraries; Museums and other cultural institutions; Local cultural programs; Sports
8. Education	Construction and maintenance of primary schools, gymnasiums, lyceums, after-school and other educational institutions, boarding schools; Remuneration of staff (including teachers)	Construction and maintenance of kindergartens.
9. Social Welfare	Social protection and maintenance of social institutions.	Housing construction and other facilities for socially vulnerable groups as well as for other population categories.

Scope of fiscal data: one autonomous territorial unit, raions, Chisinau and Balti, municipalities, cities, villages, and local government budgetary organisations.

IMF GFS

Availability of fiscal data: High

Quality/reliability of fiscal data: High

GENERAL INTRODUCTION: The most important laws related to subnational government finance are law no. 397-XV on Local Public Finance of 16 October 2003; the Tax Code of the Republic of Moldova no. 1163 of 24 April 1997, law no. 847-XIII on the Budget System and Budgetary Process and the Local Public Administration Act of 2006. The Law on Public Administration stipulates that subnational governments enjoy financial autonomy and can take the initiative on matters pertaining to local administration. However, despite a new local government finance system which came in force on 1 January 2015, based on the 2013 amendments to the 2003 Law on Local Public Finance, three key indicators of local autonomy (autonomy over local budget; control over local revenues; authority to determine local expenditures), show that budgetary processes in particular are still centralised to a great extent.

Subnational government expenditure by economic classification
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure	1 129	8.7%	24.5%	100%
Inc. current expenditure	884	6.8%	21.5%	78.3%
Compensation of employees	626	4.8%	57.8%	55.5%
Intermediate consumption	179	1.4%	19.3%	15.8%
Social expenditure	41	0.3%	2.6%	3.6%
Subsidies and current transfers	36	0.3%	8.6%	3.2%
Financial charges	2	0.0%	1.6%	0.2%
Others	0	0.0%	-	0.0%
Incl. capital expenditure	245	1.9%	49.3%	21.7%
Capital transfers	4	0.0%	15.8%	0.4%
Direct investment (or GFCF)	240	1.9%	51.3%	21.3%

EXPENDITURE: Subnational government expenditure in Moldova as a share of GDP and of public expenditure in 2020 are low, much below the EU27 average (18.3% of GDP and 34.3% of public expenditure), with stable ratios compared to 2016. Subnational government expenditure is mostly comprised of current expenditure (78.3% of their expenditure). Subnational governments are important public employers: subnational government staff spending accounted for almost 58% of total public staff spending in 2020 (vs 53.6% in the EU27 on average). In fact, for a large portion of these expenses, subnational governments do not have decision-making power, and they are mostly executing the national education budget (including salaries of educational staff).

DIRECT INVESTMENT: Subnational governments are significant investors: 21.3% of their expenditure was dedicated to investment in 2020 (vs 9.9% on average in the EU27). In 2020, subnational government investment accounted for more than half of total public investment (51.3%), close to the EU27 average (50.9%).

Direct investments is largely financed from special purpose transfers from the state budget, in addition to national investment funds (e.g., the energy efficiency fund, the ecological fund, the regional development fund, the social investment fund, etc.), international grants, and through public-private partnerships. The distribution of the funds allocated for investments to subnational governments is made in a highly non-transparent manner as there aren’t any clear rule or formula governing this allocation. As a result, the distribution of the funds is considered to be highly politicised and a problem at the country level. In this regard, the IMF, in its Technical Assistance Report on Moldova of July 2021, warns about the risks of corruption linked to the lack of institutionality regarding the allocation of funds. For instance, projects financed by the Ecological Fund have experienced an unusually high level of irregularities: according to an audit made by the IMF in 2018, almost all of the 31 local projects that were audited reported irregularities in areas spanning from the project selection to implementation.

The Law on Public-Private Partnerships, the Law on Concessions and the Law on Local Public Communal Services provide the legal grounds for the establishment of PPPs, but they remain rare.

Subnational government expenditure by functional classification
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure by economic function	1 129	8.7%	-	100%
1. General public services	101	0.8%	17.4%	9.0%
2. Defence	1	0.0%	2.0%	0.1%
3. Security and public order	1	0.0%	0.4%	0.1%
4. Economic affairs/transports	132	1%	21.1%	11.7%
5. Environmental protection	2	0.0%	11.2%	0.2%
6. Housing and community amenities	105	0.8%	82.8%	9.3%
7. Health	11	0.1%	1.3%	1.0%
8. Recreation, culture and religion	71	0.5%	57.6%	6.3%
9. Education	625	4.8%	45.5%	55.3%
10. Social protection	81	0.6%	3.6%	7.2%

Education is by far the most important subnational government budget item in Moldova, representing 55.3% of total subnational government expenditure in 2020, and 45.5% of consolidated public expenditure in education. This reflects the responsibilities of the raions and municipalities in the construction and maintenance of educational facilities. Concerning staff and teachers’ salaries, subnational governments have no control, as salaries are determined by the central government. Since the school financing reform, half of the expenditures at the local level are carried out by the second-tier level (raions). Education is followed by three other sectors which account for a close share of subnational government spending: economic affairs/transports, housing and community amenities and general public services. Regarding expenditure on social benefits, these are also mostly carried by the raions. Otherwise, subnational governments have little decision-making power over social policies.

Subnational government revenue by category
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total revenue	1 150	8.9%	29.2%	100%
Tax revenue	250	1.9%	10.0%	21.8%
Grants and subsidies	865	6.7%	-	75.2%
Tariffs and fees	27	0.2%	-	2.4%
Income from assets	8	0.1%	-	0.7%
Other revenues	0	0.0%	-	0.0%

OVERALL DESCRIPTION: Subnational governments in Moldova have the following sources of revenue: own revenues, in particular from the real estate tax, the land tax, the road tax and fees and charges; shares from the personal income tax (PIT); transfers from the equalisation fund and transfers with special destinations; (iv) grants from internal and external sources. Finally, while first-level local authorities can receive own-source taxes and fees, second-level authorities have no own-source taxes but can collect only fees.

Grants and subsidies represent the most important source of subnational government revenue, accounting for a very large share of subnational government revenue: 75.2% compared to 46.6% in the EU27 in 2020. Consequently, the share of tax revenue is limited (21.8% vs 40.1% in the EU27 ). Subnational government tax revenues represented only 1.9% of GDP in 2020 (stable since 2016) and 10% of public tax revenues, well below the EU27 average (7.2% of GDP and 27.1% of public tax revenue). Other sources of income, such as tariffs and fees and property income, account for a small portion of subnational government revenue (3.1%). The 2013 amendments to the Law on Local Public Finances, first implemented in 2015, introduced changes to the allocation of transfers to local governments and local budget formulation. The principle of balancing local expenditures to a certain minimum level, established nationwide, was replaced with a new formula focusing on local fiscal capacity.

TAX REVENUE: Subnational governments in Moldova suffer from an insufficient tax base. In addition to being limited, tax revenues are mainly shared, leaving limited taxation power to subnational governments since they have no power to regulate, manage or collect those taxes. Gagauzia, however, benefits from 100% of revenues generated on its territory by wage, income, VAT and excise taxes.

Changes in the Law on Local Public Finance in 2013 modified tax sharing arrangements. In 2016-2017, PIT rates were adjusted, and in 2019 the share of the PIT allocated to municipal governments was increased two times. As a result, the PIT is currently redistributed as follows: 100% of the total volume collected on the territory for communes and cities; 50% for cities-residence of districts; 55% for municipalities; and 25% for districts. Revenues from PIT assigned to the subnational government budget represented, 68.2% of subnational government tax revenue (1.3% of GDP) in 2020. Until 2014, a given percentage of both the PIT and CIT were allocated to subnational governments. Now, most of the CIT goes to the state budget, except for 10% which goes into an Equalisation Fund for local authorities (since 2019).

The main own-source tax is the recurrent tax on immovable property (on land and buildings) which is paid by both individuals and legal persons. It is calculated from the estimated cadastral value of the property (however, only 20% of local assets have been registered with the Cadastre Agency). The rate is established according to the type of property. Local authorities can establish their own rate within a range established by the tax code. In general, local authorities set property tax rates at the minimum in villages and communes, while in cities the rates are slightly higher. In March 2016, local governments were given new powers to change land use, as well as real estates’ assessment, two important factors for consolidation of local governments’ fiscal base. In 2020, the property tax accounted for 4.5% of subnational government tax revenue (0.1% of GDP), well below the OECD average (1.0% of GDP in 2020).

Other local taxes include an entrepreneurial patent, a tax on natural resources (benefitting regional governments only), the inheritance tax, and the road tax. In 2017, the transfer of the collection and administration of the road tax to local governments contributed to the overall growth of local budgets by 10% to 20%, according to NALAS and the Congress of Local Authorities from Moldova.

GRANTS AND SUBSIDIES: Subnational governments can benefit from two types of financial transfers: general purpose transfers (echilibrium) financed by the Equalisation Fund, and special purpose transfers, financed by the central budget. Overall, only 3.8% of transfers were capital grants in 2020, compared to 96.2% of current grants.

Fiscal equalisation mechanisms in place in Moldova aim to ensure that mandatory and basic services are provided in all regions. General balance transfers, funded through an Equalisation Fund, are allocated according to equalisation formulas, stipulated in the Law on Local Public Finance. There is one formula for the regional level, and another for the local level. For the local level, the allocation of funds is carried out in inverse proportion to the fiscal capacity per inhabitant multiplied by 1.3 and, and in direct proportion to the population and area. For the regional level, transfers are calculated according to a formula based on both the population and the district size. Since 2019, 10% of revenue from the Corporate Income Tax are drawn into the Equalisation Fund.

Special-purpose transfers are allocated to subnational government budgets for the funding of education as well as the competences delegated to subnational governments by parliament on the central government’s proposal. In addition, there are different special funds, from which local authorities may receive specific grants such as the regional development fund, the environmental fund, the energy efficiency fund and the special fund for construction and maintenance of roads. In 2022 several of these funds were merged, in full or partially, to create the Local Development Fund.

OTHER REVENUE: Tariffs and fees accounted for only 2.6% of subnational government revenues in 2020, which is low compared to international standards (10.3% on average in EU27). Local fees can be imposed, modified or cancelled exclusively by amending and supplementing the tax code. However, subnational governments can collect multiple fees such as fees on natural resources, parking and parking lot fees, market, accommodation and resort fees, commercial and social services, solid waste removal, water distribution, advertising services, etc. subnational governments also receive revenues from fines and penalties related to administrative sanctions.

Revenues from property income (0.7% vs 1% on average in the EU27) include rents from the use of public assets, revenues from sale and privatisation of public property. Revenues collected from public property are mainly used to cover budget deficits when necessary.

Subnational government fiscal rules and debt
2020	Dollars PPP / inh.	% GDP	% general government debt	% SNG debt	% SNG financial debt
Total outstanding debt	78	0.6%	1.9%	100%	-
Financial debt	78	0.6%	1.9%	100%	100%
Currency and deposits	0.0	-	-	0.0%	0.0%
Bonds / debt securities	0.0	-	-	0.0%	0.0%
Loans	78.	-	-	100%	100%
Insurance pensions	0.00	-	-	0.0%	-
Other accounts payable	0.00	-	-	0.0%	-

FISCAL RULES: Article 13 of the law on local public finance requires that local budgets must be balanced. If revenue collected is lower than the approved budget amount, subnational governments shall reduce expenditure accordingly. In a situation where budget balance is endangered, certain grants can be reduced (except for payments to pay down the debt). Semi-annual reports are prepared and used by the Ministry of Finance to monitor the budget of subnational governments. Information on the budget structure of subnational governments is available on an online portal on budget transparency of the cities, towns and villages of Moldova.

DEBT: The Law on Local Public Finance (no. 397/2003, last amended in 2013) allows municipal borrowing for financing capital expenditure only (“golden rule”). The law also enables local authorities to issue guarantees on borrowing to municipal enterprises. However, according to law no. 419/2006 on Public-Sector Debt and Government Guarantees, local authorities are required to obtain the prior approval of the Ministry of Finance before borrowing long-term. There is also a cap on debt service, including repayment of principal and interest for existing debts (20% of annual municipal revenues).

The total outstanding subnational government debt was quite low in 2020, accounting for only 1.9% of public debt and 0.6% of GDP, well below the EU27 average (13.9% of GDP and 15.4% of public debt). It was entirely composed of loans in 2020, even though subnational governments are allowed to access bond markets.

TERRITORIAL MANAGEMENT OF THE CRISIS: The COVID-19 outbreak in Moldova was first recorded on 8 March 2020. On 13 March 2020, in order to respond to the crisis, a National Committee for Public Health Emergency was developed and endorsed the National Emergency Preparedness and Response Plan. The central government also convened an Extraordinary National Public Health Commission to ensure inter-sectoral coordination and communication in implementing public health related warnings and activities. The Ministry of Health, Labour and Social Protection (MoHLSP) took a leading role in managing the response to the pandemic and acting quickly on all related aspects.

Extraordinary Territorial Public Health Commissions were established, whose function was to apply the health measures at the territorial level, and to implement new measures based on the territorial epidemiological situation and the COVID-19 Infection Preparedness and Response Plan. Starting on 1 October 2020, districts have been classified according to a colour code, based on their epidemiological situation. In high-risk (red) zones (over 100 new cases per 100 000 inhabitants in the previous two weeks), subnational governments were allowed to enact adjusted measures on this basis, and implement stricter restrictions. As of May 2021, the Chisinau Municipal Extraordinary Commission for Public Health began to take additional, sub-national measure to face the epidemiological situation in the capital.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: In April 2020, the central government announced that MDL 3.2 billion (USD 190 million) would be allocated to support the economy, businesses and households, including MDL 1.06 billion (USD 63 million) for social insurance and unemployment benefits. The measures planned as of October 2020 reportedly amounted to over MDL 4.4 billion (USD 260 million, or 2.1% of GDP). Key measures included subsidies to cover social and healthcare insurance contributions, an exemption from patent payment, an extension period for payment for all types of local taxes until the end of July 2020, extension of certain tax facilitation measures for business, such as subsidies for business tied to payroll taxes (Personal Income Tax, social contributions). Although the government developed economic and fiscal measures within the context of the state of emergency, no comprehensive COVID-19 response economic relief package has been implemented.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: The economic crisis caused by the COVID-19 crisis has significantly affected public finances. Subnational government revenue increased between 2019 and 2020 by 4% (in real terms). This was driven by an increase of both transfers from the central government (+4%) and shared-tax revenues (+4%), with an increase of +9% for the PIT and +63% for the excise tax. Although capital grants and other tax revenues fell in 2020 (e.g., property tax), they represent a smaller portion of local governments’ total revenue.

On the other hand, subnational government spending decreased overall, except for compensation of employees (+5%) and capital transfers (+43%). Analysing spending by function, spending on healthcare fell despite the crisis (-4%), as did spending on education (-2%), while spending on economic affairs (+12%), on housing and community amenities (+8%) and general public services (+4) increased.

Finally, subnational government debt increased considerably (+24%), driven exclusively by a significant increase in pandemic-induced borrowing. This mirrored the situation at the national level. According to the National Bank of Moldova, general government debt increased by over 20% between the first and third quarter of 2020. As of January 2022, the IMF projected a public debt increase from 28% of GDP in 2019 to 37% of GDP in 2021 due to a significant increase in pandemic-induced borrowing.

ECONOMIC AND SOCIAL STIMULUS PLANS: Since the central government did not develop any comprehensive COVID-19 economic relief response for after the crisis, most of its medium-term economic plan depended on international aid.

On June 2020, the European Commission announced an Economic Recovery Plan for the Republic of Moldova, worth up to EUR 600 million in macro-financial assistance (MFA), grants and investments, supported by blending and financial guarantees. Over the subsequent three years (2020-2022), this new funding is intended to promote investment to boost a sustainable and inclusive recovery from the crisis. On July 2020, the European Commission, on behalf of the EU, approved the disbursement of EUR 30 million as the second tranche of the macro-financial assistance to the Republic of Moldova on the basis of the Memorandum of Understanding signed in 2019. In parallel, the EU and the Republic of Moldova concluded a new emergency MFA in the amount of EUR 100 million for the following 12 months. The programme was designed to assist Moldova in covering its external financing needs, while implementing a wide ranging and ambitious reform agenda.

Finally, in August 2020, the Council of Europe Development Bank (CEB) and the Ministry of Finance of Moldova signed a EUR 70 million loan agreement to mitigate the impact of COVID-19 on healthcare and employment, in particular to support SMEs, providing financing for working capital and investment needs.