Economic Recovery Development Policy Oeration

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Closed

This program document describes on the Economic Recovery Development Policy Loan to the Republic of Moldova. It supports a reform minded Government as it starts to implement measures to address a deep fiscal crisis brought on by the global recession and pre-election spending and policy drift. It does so during a period of continued political uncertainty in which the new Parliament has twice failed to elect a President, meaning that another round of general elections is likely in the second half of 2010. The operation is therefore designed as a bridge to a longer term program of annual support which could be developed once political uncertainty abates. The operation will support short-term corrective policies in the new Government's 'Economic Stabilization and Recovery Program' in two ways. First, the program helps to protect priority expenditures for economic recovery and social protection during fiscal correction. The operation supports enhanced finding for targeted social assistance and road maintenance and a redirection of agriculture subsidies towards more efficient investment grants. The latter two actions should enhance economic activity. Whilst reducing vehicle operating costs in the economy and preserving public investments, the increase in road maintenance will also help employ returning migrants and recently unemployed construction workers. Second the operation will lay the foundations for a sustained post-crisis recovery through exports and private investment. It will assist Government to remove longstanding structural policy constraints and cumbersome regulations which retard improvements in Moldova's productivity and competitiveness, restrain exports, limit foreign direct investment, and which have led to jobless growth in recent years. The removal of these constraints should dampen the recession and place Moldova on firmer foundations for growth and job creation once export demand recovers. Since the impact of the crisis on poor people in Moldova will be more acute in rural areas, emphasis is placed on measures which could stimulate traditional wine exports. Complementing these measures the program seeks to initiate reforms which first make the energy sector financially viable and which then pave the way for an injection of private investment in energy and telecommunications.

FY17 - Energy and Extractives,FY17 - Financial Sector,FY17 - Information and Communications Technologies,FY17 - Social Protection,FY17 - Transportation

World Bank Group

Project

Road, Bridge, Raw Materials, Government