Technical assistance to the SOEs’ governance reform

Donor: Soros Foundation Moldova

Project duration: 18 months

The overall goal:  To consolidate the capacity of the Moldovan Government to enforce the good governance principles in SOEs.

Objectives: 

• Increase the transparency and communication of the PPA with the public on SOE sector and reforms. 
• Improve legal framework to enhance corporate governance and respond to IMF’s recommendations.

Project beneficiaries: 

• Direct: Public Property Agency (PPA), Ministry of Economy (ME), Ministry of Finance (MF), 7 beneficiary SOEs for which official mandates will be elaborated;
• Indirect: all state-owned enterprises, the entire economy.

Context:

In November 2021, the Government of Moldova entered into a new Memorandum with IMF . One of the main conditionalities of this agreement is related to fostering the governance in the state-owned enterprise (SOE) sector in Moldova. According to a recent IMF report on Country Governance Assessment , the state-owned enterprise (SOE) sector in Moldova is largely inefficient, creating pressures and costs for the entire economy. Governance deficiencies and corrupt practices are the main impediments to ensuring the efficiency of those businesses. SOEs continue to suffer from inefficiencies due to political appointments to boards, low tariffs because of political considerations and direct or indirect subsidies that do not create incentives to streamline business and distort the competitive environment. There is a strong need for reforms in the SOEs’ sector, given the issues with the law enforcement, weak technical capacities of the PPA and ME and weak governance with SOEs.