The European Commission adopted on Tuesday a proposal to grant the Republic of Moldova with new Macro-Financial Assistance (MFA) of up to €150mln to help the country cover part of its external financing needs in the coming two years.
The EU Commission stated that from the total amount up to €30mln would be provided in grants and up to €120mln in medium-term loans at favourable financing conditions, according to a press release.
The new MFA would build on the two previous MFA operations through which the EU has disbursed a total of €160mln to the Republic of Moldova since 2017.
The proposed MFA requires adoption by the European Parliament and the Council before it can enter into force and disbursements that can be made would accompany the country’s new IMF programme, approved on December 20.
“The MFA operation would contribute to reducing the economy’s short-term balance of payments and fiscal vulnerabilities,” said the EU Commission.
“Disbursements under the proposed MFA would be strictly conditional on good progress with the IMF programme and on the implementation of specific policy conditionality to be agreed between the Republic of Moldova and the EU in a Memorandum of Understanding,” added the EU Commission.
The Commission stated that these policy conditions aim to address some of the fundamental weaknesses exposed in recent years in the Republic of Moldova’s economy and economic governance system, and in other key areas, including good governance and fight against corruption, the rule of law, and energy security.
The conditions will be in line with the Republic of Moldova’s commitments under the programme agreed with the IMF and World Bank as well as the EU budgetary support operations and the DCFTA agreement.