Last week, the credit rating agency Moody’s a confirmed Moldova’s rating: B3 with a stable outlook. The authors of a new Sic! article note the press affiliated to the government presented the news as a good thing that should gladden us. “Publika, for example, had such a title “Conditions for business. Moody’s experts: Moldova’s economy is stable”. However, a glance at the scale used by Moody’s for the rating shows Moldova’s positon is not at all encouraging”.
Publika quotes Alexandru Baltag, director general of the Moldova Business People Association (founded by Vlad Plahotniuc), who expresses his optimism: “It is a positive signal for the foreign investors that their money that was eventually invested in Moldova’s economy is safe. For Moldovan or foreign companies that already operate in the Republic of Moldova, the rating shows the risks in the country are small.”
The newspaper Timpul found another optimistic expert. Roman Chircă, director of the Market Economy Institute and the favorite of the GMG media trust, said: “The Republic of Moldova is one of the few countries with a lasting B3 rating and a stable outlook. This is a sign for investors that the conditions in the county are stable for developing businesses, without major risks”.
“Our editorial office decided to contact Sergiu Tofilat of Watchdog.md for an expert opinion. Unlike misters Baltag and Chircă, this didn’t express his contentment with the B3 rating that is close to the tail. The ratings that start with C mean the country is bankrupt or close to bankruptcy. B3 is only one step up. According to Sergiu Tofilat, the explanation provided by Moody’s for Moldova’s rating reveals a series of serious problems, not the absence of risks for investors,” says the article.
The authors note the agency’s argumentation looks indeed positive - Outlook: Stable. In other words, the agency does not anticipate the worsening of the situation in Moldova. The other side of the coin is that the situation will not improve either. But what the experts of the “stable outlook” affiliated to the government omitted are the numerous systemic problems identified by Moody’s. With the assistance of Sergiu Tofilat, the main negative points were taken out of the Moody’s argumentation.
Among these are the reduced economic diversification, too great dependence on agriculture and vulnerability to the weather conditions, dependence on remittances and vulnerability to the economic situation in other countries, migration and insufficiency of labor force without which long-term economic growth cannot be ensured. The insufficient utilization of capital costs or, in other words, poor capacity to implement infrastructure projects for which financing was already planned and the weak economy show that even if the debt/GDP ratio is good, there is a debt payment risk.
“With B3, Moldova is in a select company alongside Mongolia, Ecuador, Pakistan or Greece, which are still struggling to overcome the crisis. This rating is another negation, at international level, of the alleged successes of the government. The fact that the media outlets controlled by the PDM presented it as a positive thing is another confirmation of the ridiculousness of Moldovan politics,” says the article.
The full article in Romanian can be found here. Sic! is a fact-checking, promise-tracking and explainer project implemented by IPN with support from Soros Foundation Moldova and the Black Sea Trust.
