State of Country Report 2015: Moldova facing unprecedented challenges for its economic and social security

These vulnerabilities could be easily alleviated if the government would have shown transparency and efficiency in strengthening the country’s economic and social security. “Instead of improving the country’s condition, political elites are fundamentally undermining it, by intensifying divisive rhetoric within society, perpetuating political control over public institutions, blocking structural reforms’ agenda and compromising relations with external partners and institutions”, said Adrian Lupușor, Expert-Grup executive director.

Crisis in the banking system was at the bottom of current economic issues faced by Moldova. Frauds amounting about 12% of GDP which happened at the three systemic banks, could be avoided by Central Bank and other relevant institutions, however, their long-delayed and insufficient reaction can be only explained by either malicious practices or incompetence.

Economic growth has lost its pace in 2014, and in 2015 it could become negative. Consumers have become more cautious with their savings, exporters suffer due to economic problems faced by Moldova’s main trading partners and risks from financial sector risks are looming worryingly on the stability and integrity of the public budget. Although the main socio-economic indicators –employment and poverty rate, have not significantly worsened, tightening economic conditions and fiscal austerity will inevitably lead to loss of progress achieved in recent years in terms of employment and poverty reduction. In order to rebound the economy, the government should restore the trust from citizens and business through implementing measures to fight high-level corruption and through more transparency in property relations.

The education sector is a leader in implementing reforms over the past years. At the same time, reforms advance with various rapidity in all levels of education, especially in the area of vocational education. Also, 2015 was marked by an increasing trend from highly qualified individuals to emigrate and also by the departure of some talented and experienced public servants from state institutions, a phenomenon that could further impede reforms launched or assumed by the Government.

Moldova is a country that is highly vulnerable to climate change, a phenomenon which is expected to intensify through growing temperatures. Moldova’s vulnerability on this aspect arises in particular from the socio-economic importance of agriculture, given that half of the population resides in rural areas and about a third of the workforce is engaged in agriculture.

Moldova’s domestic and foreign policy was marked by its European momentum externally, and mimicking of reforms internally. Also, this period has been marked by significant changes in the political scene, characterized by the diminishing share of pro-European parties and strengthening positions of the pro-Russian parties and the pro-Eurasian vector in the public and political realm. "Unfortunately, the European integration agenda has been seriously undermined, due to corruption, “captured” state institutions and due to political instability, problems which were exacerbated by Russia’s provocations in the region and the deteriorating situation in Ukraine” said Dionis Cenușă, Expert-Grup asociate expert. In order to minimize impact of these risks, the civil society together with development partners should place more pressure on the government, in order to democratize political parties, strengthen democratic institutions and European agenda, countering Russian propaganda and fostering strategic dialogue with Ukraine.

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The Report has been published by Expert-Grup Think-Tank in partnership with Friedrich-Ebert-Stiftung (FES). The authors alone are responsible for the views expressed in this document, which may not be necessarily shared by other organizations,