To renovate its infrastructure and to develop, the Republic of Moldova needs about 8.5% of the Gross Domestic Product, which is nearly 23 billion lei. But the state does not have this money in the public budget. A solution is to borrow money from outside the country as the Government’s foreign public debt is small and the interest paid on foreign loans is much lower than on domestic loans, said economic expert Vyacheslav Ioniță.
The expert of the Institute for Development and Social Initiatives “Viitorul” said that the Government’s debt in 2022 was 34% of the GDP, almost three times lower than in 1998, when it represented 82.8%. “The state debt of the Republic of Moldova is not too big. Against other states, it is among the smallest debts as the debts of these states represent about 60% of the GDP. The Republic of Moldova’s debt is almost twice smaller than in the European countries and in the countries of the region,” noted the economist, being quoted by IPN.
In 2022, the Government of the Republic of Moldova received 17.7 billion lei from outside, with 4.5 billion lei being in the form of grants, while 13.2 billion lei in the form of loans. This is twice more than the previous historical record of 2021, when 9.2 billion lei came: 2.4 billion lei grants and 6.7 billion lei loans. Over the past two years, the Republic of Moldova obtained more foreign financial support than in any of the five years,” stated Vyacheslav Ioniță
The bank theft left Moldova isolated at international level and the country only now overcomes this situation. It failed to obtain billions of lei in the form of grants. “Since 2015 until 2022, the country failed to get 34.5 billion lei. The situation has improved. It means that the government works efficiently and the relationship with the foreign partners is to our advantage. An appropriate political relationship means foreign financial support as well,” said the expert.
In 2022, the Republic of Moldova paid 2.7 billion lei interest on foreign loans. As the internal loans that were very expensive were decreased in volume and foreign loans were raised, 300 million lei was saved. This year the Government projects to pay 5.5 billion lei interest, but the sum could be lower as not much was borrowed internally.
Moldova paid an average rate of 1% on foreign loans and of 6.6% on domestic loans last year. Therefore, the Government should borrow money externally.
