Moldova's medium-term state budget deficit to be covered preponderantly from external sources

Chisinau, 20 December /MOLDPRES/ - The state budget’s deficit, which will maintain in the interval 2.4-2.9 per cent from the Gross Domestic Product (GDP), will be covered from external sources at a level of 90 per cent, according to the programme, Management of the state’s debt for medium term (2018-2020), approved by the cabinet today.   

‘’This evolution shows Moldova’s considerable dependence on foreign lenders and, implicitly, on the conditions of financing and structural of accessing foreign funds,’’ Finance Minister Octavian Armasu said at the cabinet meeting. According to Armasu,  in 2018-2020, decision-makers estimate that the government will benefit from entrances of state foreign loans, of which 22.9 per cent on average will be used for supporting the budget and about 77.1 per cent will be meant for financing investment projects.  

At the same time, on this period, the state foreign loans will be provided almost fully by multilateral institutions. The most important lenders for the period 2018-2020 will be the European Investment Bank (EIB), with a share of 30.6 per cent from the foreign loans, World Bank Group – 28.9 per cent and the European Bank for Reconstruction and Development – 23.3 per cent, European Commission – 5.6 per cent, Council of Europe Development Bank – 5.6 per cent, International Monetary Fund – 4.3 per cent.

To avoid the major exposing of the state foreign debt’s portfolio to certain types of risk, the programme establishes annual parameters of risk and sustainability proceeding from the current and historical structure of the state debt’s portfolio, as well as based on the results of the analysis of the basic scenario of financing. The fundamental goal of the state debt’s management is to provide the needs of financings of the balance (deficit) of the state budget at an acceptable level of medium- and long-term expenses, in conditions of limiting of the risks implied.

The state debt is to maintain at about 40 per cent of the GDP in late 2020.

(Reporter V. Bercu, editor A. Raileanu)