RESPONDING TO THE GLOBAL ECONOMIC CRISIS:

MOLDOVA’S EXPERIENCE

Ruslan CODREANU - Head of the Policy, Strategic Planning and External Aid Department, State Chancellery of the Republic of Moldova

Regional Policy Roundtable in Eastern Europe and Central Asia on Economic Crisis Responses from a Governance Perspective

Chişinău, Republic of Moldova6-7 July 2010

Crisis for the Republic of Crisis for the Republic of Moldova was…Moldova was…

1) A process recorded since September 2008 with negative economic and social impact

2) A result of the crisis in the financial and public policy management, promoted by the previous Government

3) Opportunity for a new approach for the development of the country, proposed by the new Government

Political context Political context

5th of April 2009

29th of July 2009

25th of September 2009

How we went through the How we went through the year 2009!year 2009!

Economic decline was -6.5%

Remittances fell by about 30%

Foreign direct investment fell 6 times

The general government deficit increased 7 times

Stagnation of the important sectors of the economy

Number of unemployed persons increased 1.7 times (including the returned migrants)

Steps ahead:Steps ahead:

Either…or…Either…or…

I. Status-quo Postpone imperative reforms because of

insufficient financial means (fiscal policy, public expenditures, education, social security, etc.)

Continue money allocation without due efficiency analysis

II. Take attitude Initiation of imperative reforms Increase public expenditure efficiency

through reduction and redistribution Release of additional foreign aid in order to

implement urgent public policies and contract the public budget deficit

2 scenarios of economic 2 scenarios of economic revival:revival:

100

92 9295

100

106100

9295

100

105

110

2008 2009 2010 2011 2012 2013

GDP Forecast

without an anticrisis plan with an anti-crisis plan

ESRP based on 3 pillarsESRP based on 3 pillars

KEY PRINCIPLES

Equity Multiplier effect

Efficient public sector

Participative process

Other action steps:Other action steps:

A new approach for the economic growth in Moldova – orientation towards innovation…

As a result in the 1Q of As a result in the 1Q of 2010:2010:

GDP +4.7%

Consumer Price Index +5,5 %

General public deficit (neg.) +18.2%

Trade balance (neg.) +12.3%

Average wage (real terms) + 0.9%

Fixed capital investments – 23.4%

Here we are!Here we are!

September 2008September 2008

20092009

2010, without ESRP2010, without ESRP

2010, with ESRP2010, with ESRP

Next steps…Next steps…

Strengthening government capacity to provide high quality public services

Effective management of public spending towards sectors with growth potential and to the most vulnerable persons

Increasing internal growth potential based on investments, modern technologies, innovations, sustainable development

Development of communication infrastructure Stimulate demand for new products,

technologies, services Developing public - private partnerships:

Business - Science-Government-Civil Society Developing skills for the new knowledge-based

challenges of the global economy

Thank you!