Only 10% of foreign assistance is oriented to real sector of economy, experts

Experts of the Institute for Development and Social Initiative “Viitorul” recommend that the foreign assistance coming to Moldova should be used to implement production development projects, not for consumption. Currently, only 10% of the foreign assistance is oriented to the real sector of the economy. The recommendations are contained in the study “Assessment of the capacity to absorb the foreign assistance provided to Moldova”, which was launched by “Viitorul” on September 2. According to the study, in 2010 Moldova received US$450 million for development and the volume of foreign assistance continues to rise. But this assistance is not used efficiently. Coordinator of the study Leonid Litra said the authorities play more the role of consumers. They do not influence much the donors’ schedule and thus the financed projects are not always of major importance, while some of the areas do not receive assistance. The growth rate of the foreign assistance is due to the donors’ wish rather than the Government’s increased spirit of initiative, he said. Leonid Litra also said that the efficiency of the money used to support the budget practically cannot be controlled. “Policies are adopted, but the results produced by them are not followed. The effect of the given resources on the national priorities is also out of attention,” said the expert. The authors of the study said the foreign assistance is fragmented between ministries and it is thus hard to divide the responsibilities. Analyst Viorel Garbu highlighted the inability of the state institutions to negotiate and manage foreign assistance projects. “The traditional and less traditional donors created project implementation units that work very efficiently. But the persons working in them leave to the private sector or other projects when those projects are completed. They do not want to work in the central public administration and ministries owing to the low salaries. The situation of the local public authorities is worse as many of them do not have capacities to negotiate with foreign donors,” said Garbu. Study co-author Cirina Gaibu said that if Moldova benefits from foreign assistance of 5% of the GDP the next years, the main economic indicators will not diminish. But the fact that the Government and the local authorities, at least of the municipalities of Chisinau and Balti, co-finance projects should not be neglected, according to Gaibu. The experts recommend prudently managing the foreign assistance, taking into account the size of Moldova’s foreign debt.