EU helps Moldova out of COVID-19 crisis, but money comes with strings attached
The EU is offering â¬ 3 billion in emergency loans to ten of its neighboring countries as part of its global response to the coronavirus pandemic.
Known as macro-financial assistance (MFA), the loans come with very favorable terms and low interest rates. The AMF’s objective is to help countries that are geographically, economically and politically close to the EU to limit the economic fallout from the crisis.
Why does the EU lend money to its neighbors?
EU Commissioner Oliver Varhelyi, responsible for the neighborhood and EU enlargement, says Europe will never be a safe and prosperous place until the neighborhood is also secure and prosperous. âSafe means recovering from the COVID crisis and prosperous meaning recovering from the economic repercussions caused by the COVID crisis,â he emphasizes.
Varhelyi tells euronews that it is in Europe’s interest to secure the interests of its neighbors. “Creating a world more like Europe outside of Europe” means that Europe will have “predictable opportunities for business investment in the business climate” and more “for business. All of this, he says, will contribute to the overall stability and security of the region.
Moldova – one of the beneficiary countries
In Moldova, the average monthly income is 350 â¬ per month and a quarter of the working population has already emigrated to work in other countries. Since 2010, the EU has provided macro-financial assistance to Chisinau on two occasions.
Moldova has received 100 million euros in AMF aid to deal with the pandemic. It received a first tranche of 50 million euros in November 2020. This essential financial boost will help in particular the agricultural economy of Moldova.
Moldova’s agricultural crisis
Farmers there not only suffered from the crisis, but also from a drought that began in 2020. According to BalkanInsight, from January to September 2020, agriculture in the country declined by 25.3%, a loss of ‘about 1 billion euros.
Ana Pancrat from the Moldovan Dairy Farmers Association tells us that due to the pandemic, farmers have not been able to get the nutrients they need from abroad. Due to the closings of the stores, they also could not get all the materials they needed for their farms. As the farmers could not break even, “people decided that it was necessary for their reliability to slaughter their cows,” she adds.
Charities are mobilizing to help some rural areas of Moldova, but it is not an easy task.
Daniela Sevciuc, national coordinator of the Moldovan Red Cross, says that “the list of people in absolute poverty has grown, so as the list grew it was also more difficult for the state to support them all “.
Despite being one of the poorest countries in Europe, Moldova experienced a growth rate of 3.6% and unemployment remained stable at 5.1% before the pandemic. This government was about to launch a public infrastructure construction program, but it is now suspended.
Maia Sandu, the country’s newly elected president, tells us that “the economy is in dire need of this help. Moldovan businesses were not supported at all last year. There is no money in it. the current budget to support the economy “. She explains that this will lead to job losses, loss of income and increased poverty.
Compliance with MFA conditions
To receive the money, countries must have signed a financing program with the International Monetary Fund (IMF), meet the conditions of respect for human rights, implement democratic, economic and governance reforms and suppress the corruption.
Moldova must meet these conditions in order to benefit from a second AMF tranche of 50 million euros.
For the Moldovan president, the conditions are welcome. She told euronews that they “accept citizens’ demands for good governance” and that “European taxpayers want to know that the money they have provided the Moldovans gets to the Moldovans and helps the Moldovans and does not end up being used corrupt people, including in parliament or other state institutions â.
Dumitru PÃ®ntea, economist at Expert Grup, one of the organizations in charge of monitoring AMF conditions, says he is pessimistic that the AMF conditions will be met in time. “Moldova does not have a plenipotentiary government at the moment that can implement the reforms, and at the same time, the government does not have the support in parliament. The majority of the deputies are against the reforms and against these conditionalities.” , he says.
European Commissioner VÃ¡rhelyi says he is convinced that Moldova will be able to implement the conditions for economic reform to obtain its second financial installment. He has met President Sandu and believes in his commitment.
He tells us that “it is not in the interest of the EU to pursue these objectives, these objectives that we have set ourselves together, with Moldova, and it is in the interest of the Moldovan people to achieve all these reforms because it will make their judicial system, their economic system, much more resilient and much more capable of recovering from the Covid crisis “.