EBRD urges Moldova to prioritise corruption fight

The country must enhance its administrative and institutional capacities to tackle corruption and eliminate the influence of oligarchs in the political system before it can begin European Union accession negotiations, the EBRD said in its Transition Report 2023-2024.

Local authorities should also continue to implement legislative reforms that facilitate the digitalisation of public services, the bank added.

In, addition, completing the energy-sector reform is essential to fully integrate the domestic energy market into the EU single market, enhancing energy security and reducing the country's reliance on a single energy source.

The lender expects Moldova's gross domestic product (GDP) to experience zero growth in 2023, following a 5% contraction in 2022.

Moldova is one of the economies hardest hit by the war on Ukraine, with GDP falling by 5% in 2022. Soaring inflation -- peaking at 34.6% in October 2022 -- and tight monetary policy stifled domestic demand, while a severe drought led to a steep decline in agricultural production, the EBRD said.

On a more positive note, the combination of more stable energy prices and tight monetary policy contributed to a sharp deceleration in the annual inflation rate, to 8.6% in September 2023, allowing the National Bank of Moldova to cut the policy rate to 6%, the lender added.

The bank also said that Moldovan authorities have made significant advances in tackling the nine priorities mentioned in the European Commission's opinion on the application for membership since being given EU candidate country status in June 2022.

Inflation is expected to average around 13.3% in 2023, down from 28.7% in 2022.