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Moldova

The way out of poverty and corruption is paved with good governance

Sri Mulyani Indrawati's picture

Woman speaks to World Bank MD and COO Sri Mulyani Indrawati in the Nyabithu District of Rwanda. © Simone D. McCourtie/World Bank

For the first time in history, the number of people living in extreme poverty has fallen below 10%. The world has never been as ambitious about development as it is today. After adopting the Sustainable Development Goals and signing the Paris climate deal at the end of 2015, the global community is now looking into the best and most effective ways of reaching these milestones. In this five-part series I will discuss what the World Bank Group is doing and what we are planning to do in key areas that are critical for ending poverty by 2030: good governance, gender equality, conflict and fragility, creating jobs, and, finally, preventing and adapting to climate change.


Twenty years ago, the World Bank took up the fight against corruption as an integral part of reducing poverty, hunger, and disease. The decision was groundbreaking then and remains valid today. Corruption diverts resources from the poor to the rich, leads to a culture of bribes, and distorts public expenditures, deterring foreign investors and hampering economic growth.

Remnants of the Soviet past: Restrictions on women's employment in the Commonwealth of Independent States

Alena Sakhonchik's picture


My father is a long-distance trucker based in Belarus. As a young girl, I spent long hours on the road with him. I loved traveling to neighboring and faraway cities and—even though I could barely reach the pedals at the time—dreamed of becoming a truck driver myself one day. Life ended up taking me on another path, but it wasn’t until I was older that I learned that the option of being a truck driver was never open to me to begin with.

Why?

Because my native country prohibits women from being truck drivers, one of the 182 professions out of bounds for women.

Unleashing the transformative power of the internet

Pierre Guislain's picture



In the 1990s and early 2000s, the World Bank Group and other development partners actively promoted the mobile revolution, opening up telecommunication sectors that were largely monopolistic and state-owned.  The mobile phone, which was seen initially as a luxury good, became a key driver of growth and social inclusion in Africa, South Asia and throughout the world.

A Remarkable Man

Meriem Gray's picture
Igor Tkach

Igor Tkach is a remarkable man.

As he stands tall and proud in the middle of one of the fields, his voice is loud and clear. And even the bitterly cold wind couldn’t stop him from telling his story. “We had absolutely nothing. Even the window frames were looted,” he said. He was talking about those turbulent times following the collapse of the Soviet Union. As he talked, I recalled my own Soviet-era childhood. What he was saying hit close to home.

Challenges and solutions to boosting Moldova’s trade competitiveness

Gonzalo Varela's picture
Moldova Trade Study

How can Moldova shift from a growth model based on remittances and consumption to one driven by investment, productivity growth, and innovation?
 
For this small and landlocked country, integration into global markets is crucial. As such, Moldova’s National Development Strategy, “Moldova 2020”, calls for prioritizing the expansion of exports of goods and services. To boost exports, the country needs to join regional and global value chains, to become more efficient in what it already produces, and to innovate. Attracting investment, both foreign and domestic, is also key.
 
So, how is Moldova doing in this regard?

How to encourage Moldovans to contribute to their pensions?

Yuliya Smolyar's picture
My last post discussed the challenges and reforms of Moldova’s pension system, but I would like to focus now on the incentives for contributing into a pension system. This issue is especially important for a country like Moldova, where old-age pensions are directly related to the number of contribution years and the level of individual earnings.

Such pension schemes typically envisage some level of redistribution to address poverty and equity concerns. However, excessive redistribution decreases the incentive to contribute to the pension system.

An effectively functioning incentives structure is critical to encouraging workers to contribute more in return for an adequate pension at retirement. Why? Because if the right incentives are not in place, people will avoid contributing into a system that doesn’t offer more than the minimum pension – regardless of the level of contribution.

So, in terms of incentives structure, what particular challenges does Moldova face?

Moldova: farewell 2015 and hello 2016

Alex Kremer's picture
Kids from Moldova

Let me explain why the World Bank is optimistic for Moldova.
 
Reason for optimism number 1. On the edge of the largest market in the world - the European Union - and with labour costs a tiny fraction of the EU average, Moldova could be a magnet for investment for the European consumer. Moldova's Free Economic Zones show how attractive the country can be to foreign investors when businesses are protected from corruption and hassles. The day that Moldovans get a clean economy, therefore, they will see explosive growth in such areas as light manufacturing, for example, and with that will come higher demand for labour and better wages. And faster economic growth will mean more money to pay for decent education, health care and pensions.
 
Reason for optimism number 2. Moldova has already weathered the worst of the economic shock caused by Russia's economic downturn and the 2015 drought. After a 2 percent decline in 2015, we predict that GDP growth will resume slowly in 2016 to 0.5 percent and accelerate to 4 percent in 2017.
 
Yes, of course one should not be delusional. 2015 was a tough year for the economy. There is no other word to describe a recession, a drought and a massive bank fraud for which generations of Moldovans will bear the burden. The bank fraud takes part of the blame for the fall of the leu, high interest rates and rising prices. World Bank employees are supposed to be guided by economics, not by emotions, but I cannot help feeling outrage that the ordinary Ion or Ioana will have to pay for the authorities' tolerance of fraud in the three banks.
 
But prosperity is within Moldova's reach. So, for 2016 let’s do the following...

The unfinished business of pension reform in Moldova

Yuliya Smolyar's picture
Costesti village, central Moldova. Photo by Elena Prodan / World Bank

In the early to mid-1990s, the Moldovan Government often didn’t pay pensions on time – sometimes they were up to two years late. And, they were often paid in-kind. This situation was a syndrome of the trials and tribulations that the country was experiencing in its tumultuous transition to a market economy.
 
Reform of the pension system was initiated in the late ‘90s to try to fix some of the more pressing challenges by restoring fiscal balance and helping put payments on a sustainable track – essentially meaning that payments were now made in cash, rather than in galoshes or umbrellas.
 
Similar to Moldova’s protracted transition to a free market, however, the reform of the country’s pension system is largely a story of “unfinished business”. One important reason for this is that the 1998 pension reform envisaged a phased increase in the retirement age up to 65 years for both men and women, and clear linkages between salary contributions and pension payments. This aimed to motivate Moldovans to participate in the system, but after a few years of implementation, the gradual increase in retirement age was put on hold. And, because the retirement age didn’t increase, the planned increase in the value of pensions was put on hold too.

Is Moldova on the road to energy sector viability?

Elina Kaarina Hokkanen's picture
Moldova Power Lines

The reliable and affordable supply of electricity and heating is an issue of major concern for Moldovan citizens, businesses and policy-makers. The viability and sustainability of the country’s energy sector rests on Moldova’s ability to diversify supply options and put in place the right tariff structures that would encourage investments in the energy sector. Currently, 98 percent of the energy resources consumed are imported, with over 80 percent of electricity and all natural gas coming from single sources.

To support the country’s energy sector development, the World Bank recently completed a study on electricity and heat tariffs in Moldova. The study shows the projected range of tariff increases, how much more different kinds of households would have to pay, how Ajutor Social program and the Heating Allowance could protect vulnerable people and how much those social payments would cost. 

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Valerie Lorena's picture

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A boat trip from Port Elizabeth to Kingstown, in the Caribbean country of Saint Vincent and the Grenadines, is a one-hour trip that locals take several times a day. It was during one of these journeys that the boat of Kamara Jerome, a young Vincentian fisherman, ran out of gas six miles from Bequia City in what is termed locally as the "Bequia Channel." While waiting for help with strong wind gusts and the sun on his head, the idea of developing a boat that would run with wind and solar energy was born. Soon after, the idea became a prototype; a boat using green technology was on the water making 20-year-old Jerome a winner of international innovation competitions and a role model to other Caribbean youth. 
 
In Mexico, young engineer Daniel Gomez runs a multimillion bio-diesel company originally conceived as a research project for his high school chemistry class. Gomez and his partners - Guillermo Colunga, Antonio Lopez, and Mauricio Pareja - founded SOLBEN (Solutions in bio-energy in Spanish) in their early twenties. 
 
Although Daniel and Kamara have different educational backgrounds, they do share one important skill, the ability to identify a problem, develop an innovative solution, and take it to the market. In other words, being an entrepreneur, an alternative to be economically active, that seems to work and not only for a few.

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