It is important to improve the investment climate for Moldovans to invest in their own country. Info-Prim Neo interview with Melanie Marlett, World Bank Country Manager for Moldova

[- Since this is your first exclusive interview following your arrival in Chisinau we would like to ask you, as you look back at the past few months, what is your impression of Moldova and its people?] - I have been very impressed by Moldova and the Moldovan people. The people here are warm, friendly and kind not to mention hard-working and dedicated. I feel a real sense of patriotism here and a love of the people for their homeland. I feel very honored to have the opportunity to work here with such wonderful people. [- And what about the commitment and talent of Moldovans to work hard, because the modern world has not identified an alternative recipe for reaching better standards of living?] - From the macro perspective, the commitment and talent of Moldovans to work hard is proven by substantial progress in transforming Moldova from a Soviet planned economy to a dynamic small, open market economy, with a relatively quick recovery and very significant reduction in poverty following the regional financial crisis of 1998; resilience of the Moldovan economy to the most recent shock of world energy price increases and at the same time temporary loss of access to traditional markets. On top of that, Moldova is one of the world leaders in terms of remittances / GDP ratio. On personal level, I have already met many Moldovans and most of them impressed me by their desire and commitment to engage in the development process and to achieve tangible results as soon as possible. And I was very glad to find out that some of those who received good quality education in developed countries and having had many opportunities there still came back home to work in Moldova and contribute to its economic prosperity. [- Now let us ask you the same question about Moldova’s political, economic and financial class – your opinion about their capacity and desire to provide qualified work?] - I am still new to the country and may not have enough knowledge to be able to make a solid judgement about it. Our immediate counterpart is the Government of the country and so far we have been pleased with the level of cooperation and commitment on its part. Now, we are at the point of completing our country strategy for Moldova covering 2004-2007 and we can say that, overall, the implementation of Bank supported program has been very good and we can move forward with the preparation of our next Country Strategy covering 2008-2011 based on the country’s new National Development Plan (NDP). I can say we are very pleased that the NDP was developed in a very participatory and consultative manner and therefore represents the views of many stakeholders. [- And now, to sum up the previous three questions, why do you think Moldovans can’t find work in their home country, thus being forced to look for opportunities overseas, with all the resulting negative social consequences of migration?] - I would not generalize. There are examples of Moldovans who actually found work here and started their own business. The existing situation is not a result of absence of job offers on the market (at least not only). It is more due to the fact that there may be greater opportunities in some of the EU countries than those existing currently in Moldova. This does not mean that such a situation will last forever. Countries which are now EU members and are economically strong have gone through similar processes in the past. The situation can change based on economic reforms in the area of business environment, social policies, collaboration with EU, etc. Policy makers in Moldova probably should also take into account that migration is a widespread global phenomenon. People currently migrate even from more developed countries in search of better opportunities. And there are examples of massive migration from other European countries like Sweden at the beginning of 20th century or Ireland after the World War II. There was even a joke in Ireland saying that: "Last Irish leaving the country, please switch off the light". One can hardly think of this looking at these countries now. Today, they serve as destination countries for migrants. [- Moldova is a world leader, it seems, in terms of the volume of remittances as share of the GDP. What is there more for the Moldovan economy in this phenomenon: therapy or dynamite? How much truth is it in the frequent statements that remittances provide for a permanent preservation of the current model of governance in the Republic of Moldova?] - Migration could have a positive impact on the economy if remittances and money earned outside could serve not only the consumption side but also be invested in setting up small businesses, creating jobs and, in the final instance, contributing to economic growth. Incentive mechanisms could be created for Moldovans who have migrated to gain skills outside of Moldova and come back and invest inside Moldova. Improving the investment climate for Moldovans to invest in their own country will be important. [- Large financial resources are currently directed towards Moldova, including through the World Bank, which are expected to increase in the future. How much absorption and efficient usage capacity does Moldova have, what are the donors’ guarantees that money will not be wasted or end up being stolen, as it has happened in other parts of the world?] - Every single project is appraised before the World Bank board of directors approves it. During this appraisal the aspects of usage capacity and efficiency are thoroughly analyzed. In addition, Financial Management (controls, accounting, reporting, auditing) and Procurement (procurement procedures to ensure competition) arrangements are assessed and if inadequate, safeguards conditions are put in place so that the funds are used for the purposes intended. These measures provide reasonable assurance that funds will be properly used. In addition, the World Bank is supporting capacity development of the public sector through a Public Financial Management operation as well as through a Multi-donor Trust Fund for Public Administration Reform. We are also working with other development partners to support the capacity development of the Court of Accounts. [ - How do you assess now, after years of implementation, the results of the Economic Growth and Poverty Reduction Strategy, which was supported by international donors’ financial assistance, including the World Bank?] - Mostly positively. Overall macroeconomic stability was maintained. Economic growth continued. Government understanding of strategic prioritization process has improved considerably. Government ownership has been strengthened, which is confirmed by recent process of development of NDP with strong leadership of the government. At the same time, there is no room for complacency. That is why we need to continue our collaboration with Moldova in the context of NDP. [- In this context, do you think the National Development Plan (NDP), which is replacing the EGPRSP and for which assistance was requested from the donor community, including the Bank, has more chances of being successfully implemented?] - Yes. I believe that the NDP will be successful and that the desired outcomes will be achieved. The World Bank and other development partners are committed to support the NDP in a coordinated and collaborative manner. [- How would you assess the state of the Moldovan economy at this stage and what are its short-term prospects in economic terms?] - Despite the challenging transition period, I believe that the Moldovan economy is moving in the right direction. Short term prospects are promising due to several factors, including proximity to the EU and prospects of collaboration of with the EU in the implementation of the EU Action Plan. Even with significant external shocks, e.g. wine export ban to Russia, high gas prices, and the drought, the Moldovan economy has shown resiliency, with annual growth likely to be approximately 6 percent this year. Export and investment growth has been strong. So, overall, I am quite optimistic. [- If representatives of prestigious institutions like the World Bank were allowed to respond to gossips, how would you comment, for example, the existing rumors that almost the entire Moldovan economy is under the control of circles closely affiliated, politically or family-wise, with the top leadership of this country?] - The Bank is not an institution which operates based on gossip. I will therefore refrain from addressing this question. [Would you like to celebrate Christmas in Moldova?] I look forward to celebrating many holidays here in Moldova. I want to experience the life and culture of Moldova to every extent possible. I will spend December 25 in Vienna and January 7 in Moldova. I am looking forward to it. I am especially grateful for the snow we are having here now. I like having a snowy Christmas!