The Republic of Moldova needed and in time benefitted from financial and technical assistance from a number of states and international organizations. Lots of aid were provided also during the COVID-19 pandemic and since the war in Ukraine broke out, Moldova being offered foreign assistance for coping with the refugee crisis. Society needs to know more not only about the management of external financing coming to Moldova, but also about what this consists of, why it is provided, how does it work and what effects it produces in the Republic of Moldova and what effects can be experienced if the financial support the country needs like air is absent or is interrupted. The subject was discussed by experts invited to IPN’s public debate “Socially responsible management of foreign assistance: mechanisms, guarantees, efficiency”.
Igor Boțan, the standing expert of IPN’s project, said the foreign assistance has two components – financial and technical. This is provided to the Government or other public authorities by the community of creditors and donors. The first is financial support in the form of loans and grants, including the delivery of goods or provision of works for implementing projects and programs. Technical assistance is assistance in the form of transfer of knowledge, including technologies, methodologies and techniques within projects and programs.
According to him, the national authority for coordinating technical assistance is the institution empowered to coordinate at the national level the foreign assistance provided by the community of donors and creditors. There are provisions on the regulation of the institutional framework and the management of foreign assistance by which the Ministry of Finance was designated such an authority.
Igor Boțan said that regrettably, the Republic of Moldova for 30 years already has been in a process of transition from one type of society to a normal society. The costs of such transition are very big, but Moldova’s potential is small. The international community is interested in supporting Moldova so as to prevent serious destabilization on its borders. For this reason, it aims to help the country and to bring it to a particular level by finding economic niches and by integration into a particular space. This mechanism works rather well.
Executive director of the Institute for Strategic Initiatives Vadim Pistrinciuc said the Republic of Moldova needed assistance all the time and some of the periods in its history of Independence showed how hard it is when this assistance is absent. There were years when the country wasn’t connected to serious assistance sources. The state needs foreign assistance when the management and development objectives set by the senior administration imply particular costs, but the revenues are insufficient for covering them.
The expert noted that during the last two decades, the Republic of Moldova developed from the viewpoint of infrastructure, social services – education, health, etc. But when the development level is not satisfactory for the population, new objectives are set that are to be achieved during a short period of time. In the absence of own resources, the foreign assistance is crucial and not only for Moldova’s development, but also for the current account balance of payments. The war in Ukraine, which became a large-scale drama, is the specific feature of the current period. The socioeconomic consequences of a war affect not only the logistics systems, but all the spheres of life.
“The Republic of Moldova now needs foreign assistance not only for development, but event for subsistence. The budget deficit is indeed great and should be covered with foreign funds and it is covered with foreign funds. Evidently, the money that comes directly into the budget as loans is the largest type of foreign assistance. Everything depends on the International Monetary Fund that is the most important foreign assistance organization in the world,” said the executive director of the Institute for Strategic Initiatives.
Executive director of the Independent Think “Expert Grup” Adrian Lupușor said the foreign assistance for the Republic of Moldova is of major importance, particularly now. During the pandemic, the volume of assistance grew to a record level for Moldova, but also in other countries. The assistance rises also due to the war in Ukraine and to the unprecedented economic crisis witnessed this year.
According to the expert, the foreign assistance can be divided into several categories. “One of them is the assistance for financing the budget deficit that this year is of about 19 billion lei, which is a record figure, and that will be covered with support from the development partners. This enables to pursue a simulative budgetary policy and to help the vulnerable groups. Another category is the technical assistance through transfer of knowledge, mechanisms for different reforms, while the third type of assistance is an anchor for reforms. “The foreign assistance contributes to increased responsibility. It is an additional element that makes the Government more responsible for doing a series of reforms that are defined in those technical and political conditionality elements stipulated in the financing programs,” stated Adrian Lupușor.
According to him, there are two reasons for which the donors or creditors impose conditions. “One of them is the financial reason as these institutions are directly interested in being paid back the lent money. The responsibility towards tax payers is the second, very important objective. All the donors use public funds collected from taxpayers in their own countries. When the Republic of Moldova is offered preferential loans from taxpayers’ money, the donors should come with a report to show that their money help the countries that need assistance to strengthen their state institutions and to do reforms,” said the executive director of “Expert Grup”.
The public debate entitled “Socially responsible management of foreign assistance: mechanisms, guarantees, efficiency” was the 251st installment of IPN’s project “Developing Political Culture through Public Debates” that is supported by the Hanns Seidel Foundation.
