The Cabinet endorsed the lending agreement between the Government of the Republic of Moldova and the Government of the Russian Federation concerning the provision of a state financial loan. This is the Russian loan of €200 million that will be disbursed in two tranches, IPN reports.

Minister of Finance Sergey Pușcuța, Deputy Prime Minister, said Moldova will pay an interest rate of 2% a year on this loan that is repayable in 11 years with a grace period of approximately a year. “The agreement provides that if the sums deriving from this accord are not paid on time, Moldova will pay an interest rate of 3% on the overdue payments,” stated the official.

Under the agreement, the first tranche of €100 million will reach Moldova within 30 days of the coming into force of the agreement. The second tranche will be transferred not later than October 31, 2020. The agreement does not stipulate commission for the disbursement or non-disbursement of the loan, but allows for the repayment of the loan in advance.

Answering the questions put by ministers, Sergey Pușcuța said that now Moldova pays different interest rates on the raised loans. “We consider the interest rate of 2% a year for such a loan is optimal and acceptable,” he stated, noting if the authorities identify cheaper financing sources, the loan can be anytime repaid before time.

As to the provisions concerning the participation of Russian companies in common projects on Moldova’s territory, Sergey Pușcuța said the agreement does not stipulate conditionality elements that go beyond the legal limit. The agreement provides that the Moldovan side will make effort to ensure the implementation of common projects on Moldova’s territory together with Russian companies so as to extend the economic and commercial relations between the two states.

The Russian companies will be able to take part in competitive procedures for the purchase of goods and services arranged in the Republic of Moldova on conditions that will not be less favorable than those offered to companies from Moldova and other companies.

Prime Minister Ion Chicu said that by this point of the agreement, equity is established for all the participants, no matter where they are from. In another development, he noted that when the state budget deficit is of 16.2 billion lei, such a loan is necessary. This loan and the IMF’s loan are the only sources that come as budget support.