The Government created a group led by Minister of Finance Octavian Armasu to hold negotiations with the European Commission on the draft Financing Agreement between the Republic of Moldova and the European Union on macro-financial assistance (MFA), IPN reports.

The €100 million in macro-financial assistance would help the country meet its short-term financing needs. Up to €40 million of the MFA would be provided in grants and up to €60 million in medium-term loans at favorable financing conditions. The new assistance would be disbursed in three installments in 2017 and 2018.

Disbursements under the MFA program would be strictly conditional on good progress with the IMF program and on the implementation of specific policy conditionality to be agreed between Moldova and the EU.

The loan is repayable in 15 years, while the interest rate for each tranche will be set depending on the cost at which the European Commission will borrow money from the international financial market.

MFA would help Moldova to cover part of its external financing needs over the coming two years. The operation would therefore contribute to reducing the economy’s short-term balance of payments and fiscal vulnerabilities. Also, the Government’s commitment to do reforms would be strengthened.