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Moldova

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.

Sharing PPP experiences across borders

David Lawrence's picture
How valuable are lessons of experience in PPPs from other countries? Legislative and regulatory environments differ, as do market conditions and the overall investment climate. So replicating a successful PPP in another country isn’t a simple as following the same steps or using similar contract or tender documents.
 
But that doesn’t mean lessons cannot be transferred. Even if conditions vary, the underlying principles of PPPs remain the same regardless of where it is executed. For example, a PPP is always a long-term contractual agreement between a government entity and a private company; it must be financially sound if it is to work; and risks must be identified, mitigated and allocated effectively. The details of how these principles are applied will vary depending on the regulatory and market conditions of each country. But the examples remain valid nonetheless.
 
In Ukraine, PPPs have been slow to catch on, initially because the business climate was so weak. The country’s neighbors were all more successful at implementing PPPs: Poland has 65 PPP projects underway according to the Ministry of Economy’s PPP database, and Moldova’s first PPP established a radiology and diagnostic imaging center. But none of Ukraine’s neighbors have done as well with PPPs as its Black Sea neighbor, Turkey.
 
Turkey is a regional PPP powerhouse. The 2014 PPI Global Update, which provides information on private infrastructure investment in emerging markets, puts Turkey in second place globally for the second year in a row with US$12.5 billion. In 2014 alone, 17 new projects were launched in mainly in power and transport. Not surprisingly, Ukrainian officials have been looking with great interest to Turkey’s success.

The benefits of e-Visas, and how to overcome implementation challenges

Radu Cucos's picture
The Electronic Visa (e-Visa) has emerged as one of the most innovative services implemented in the area of freedom of movement and people-to-people contacts.

E-Visa allows the management of the visa application process to take place entirely in a virtual environment. Everything is done with the help of the Internet: the visa application and supporting documents are submitted online, the payment is made online and the decision on the application is communicated online. Some of the best examples of e-Visa services I have encountered are implemented by the authorities of Australia, Turkey, New Zealand and Georgia.
 
Serving as Chief Information Officer at the Moldovan Foreign Service, I had the opportunity to lead the development of the Moldova e-Visa Service in partnership with the World Bank’s eTransformation project.

The Moldovan e-Visa service was launched on August 1, 2014. So far, we can make the following observations and conclusions about the benefits of e-Visa:

Of Reforms and a New Government in Moldova

Alex Kremer's picture
People on the main street of Chisinau, capital of the Republic of Moldova
People on the streets of Chisinau, capital of the Republic of Moldova. Photo: Elena Prodan / World Bank

After several months of campaigning and negotiations, Moldova’s new Government is about to take shape. The World Bank is looking forward to hearing the new Government’s plans for reform.

Apply for SAFE Trust Fund grants

Soukeyna Kane's picture



The SAFE Trust Fund application (Word document) is now open until 27 February 2015.
 
What is SAFE?
 
SAFE means Strengthening Accountability and the Fiduciary Environment. It is a Trust Fund group administered by the World Bank and established by the Swiss State Secretariat for Economic Affairs (SECO) and the European Commission with the aim of improving public financial management in the Europe and Central Asia region. This Trust Fund group provides support for activities to assess public financial management (PFM) performance, identify and implement actions to achieve improvements and share knowledge and good practices across countries in the region.

Rising Financial Pressures from the East

Aurora Ferrari's picture
It’s hard to get a break in the Europe and Central Asia region, it seems – even a short one. Hit hard by the troubles in the Eurozone at the beginning of the decade, emerging and developing countries in Eastern Europe are, at the beginning of this year, contending with renewed fears. Meanwhile, external pressures have built up on the Central Asia side as well.

All eyes turned to Russia recently, when on 16 December the ruble plunged by more than 11 percent, despite the Central Bank of Russia’s last-minute interest rate hike of 6.5 percentage points to 17 percent. When it looked like Russia’s turmoil might spread to global markets, western economies sat up and paid close attention.

What may have gone unnoticed, however, is the ongoing impact on our client countries in the Europe and Central Asia region.

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