ľ¹ÏÓ°Ôº's Board of Executive Directors approved today the for the Republic of Moldova that will support the Government of Moldova¡¯s efforts to assist refugees and households in the face of the fallout from Russia¡¯s invasion of Ukraine, while keeping momentum on the long-term agenda of economic integration with the European Union (EU) and enhancing climate resilience.
The $40 million budget support operation builds on the previous DPO series and aligns with the new World Bank . It is part of the World Bank¡¯s broader effort to support the government in responding to the energy and refugee crises, while building resilience against future shocks.
Moldova's economy and public finances are under strain from the energy and refugee crises, leading to reduced household incomes and high risks that hamper private spending and investment confidence. Following a recession in 2022 and a slow recovery in 2023, modest economic rebound and growth in household income are anticipated for 2024. The DPO aims to support the government's short-term objectives to continue providing support to the most vulnerable, including enhancing the social safety net 'Ajutor Social' program that supports refugees and women's participation in the labor market, and helping vulnerable and refugee-hosting families to cover the rising costs of energy consumption.
¡°Moldova is grappling with unprecedented challenges due to external shocks. The DPO will address immediate needs, such as sustaining support for the most vulnerable to mitigate the impact of the multiple crises, while also contributing to the broader objective of fostering a more competitive, resilient, and private sector-led economy,¡± said Inguna Dobraja, World Bank Country Manager for Moldova.
Additionally, the DPO supports Moldova's long-term objectives to create a more competitive and resilient economy driven by the private sector. It supports measures to strengthen the regulatory framework for competition and state aid, improve governance and competition in the energy sector, and reinforce the banking deposit guarantee scheme. The operation also promotes energy efficiency, renewable energy, and sustainable forest management for carbon sequestration and agricultural land resilience, contributing to climate change mitigation and adaptation efforts.
This operation is part of a broader financial assistance package, including support from the International Monetary Fund (IMF), the EU, and the World Bank. Parallel financing to this operation is expected from Global Affairs Canada and the Japan International Cooperation Agency. The operation will benefit from $10.5 million in grants from the Moldova ¨C Growth, Resilience and Opportunities for Well-being (M-GROW) program. The operation will also benefit from a $5 million grant from the Global Concessional Financing Facility (GCFF) to support authorities¡¯ efforts to deal with the refugee crisis. To date, GCFF has provided Moldova $49.24 million in grants that has further enabled $409.24 million in loans on concessional terms from the World Bank to support host communities and refugees.
Since Moldova joined the World Bank in 1992, over $2.1 billion has been allocated to more than 70 operations in the country. Currently, the World Bank portfolio includes 14 active projects with a total commitment of $849 million. Areas of support include regulatory reform and business development, modernization of government services, tax administration, land registration, education, roads, health and social sectors, including the COVID-19 emergency response, agriculture, water and sanitation and energy.
