CAPITAL Chisinau


A large portion of present day Moldovan territory became a province of the Russian Empire in 1812 and then unified with Romania in 1918 in the aftermath of World War I. This territory was then incorporated into the Soviet Union at the close of World War II. Although Moldova has been independent from the Soviet Union since 1991, Russian forces have remained on Moldovan territory east of the Nistru River supporting the breakaway region of Transnistria, whose population is roughly equally composed of ethnic Ukrainians, Russians, and Moldovans.


With few natural energy resources, Moldova imports almost all of its energy supplies from Russia and Ukraine. In 2018, Moldova awarded a tender to Romanian Transgaz to construct a pipeline connecting Ungheni to Chisinau, bringing the gas to Moldovan population centers. Moldova also seeks to connect with the European power grid by 2022.

The government’s stated goal of EU integration has resulted in some market-oriented progress. Moldova experienced better than expected economic growth in 2017, largely driven by increased consumption, increased revenue from agricultural exports, and improved tax collection.

During fall 2014, Moldova signed an Association Agreement and a Deep and Comprehensive Free Trade Agreement with the EU (AA/DCFTA), connecting Moldovan products to the world’s largest market. The EU AA/DCFTA has contributed to significant growth in Moldova’s exports to the EU. In 2017, the EU purchased over 65% of Moldova’s exports, a major change from 20 years previously when the Commonwealth of Independent States (CIS) received over 69% of Moldova’s exports. A USD1 billion asset-stripping heist of Moldovan banks in late 2014 delivered a significant shock to the economy in 2015; the subsequent bank bailout increased inflationary pressures and contributed to the depreciation of the leu and a minor recession.

The government’s push to restore stability and implement meaningful reform led to the approval in 2016 of a USD179 million three-year IMF program focused on improving the banking and fiscal environments, along with additional assistance programs from the EU, World Bank, and Romania. Moldova received two IMF tranches in 2017, totalling over USD42.5 million.

Economic growth in 2019 ended at 3.6 percent, driven by investment and private consumption that was supported by remittances, higher wages, and social benefits during the election cycle. The economy is, however, facing a recession in 2020 due to the COVID-10 pandemic. After the declaration of a state of emergency in mid-March, several measures have been taken to contain the crisis’s impact. Mitigating the impact of the crisis will require prioritizing health-related interventions, as well as supporting the unemployed and businesses.


Moldova’s banking system was set up in two tiers in 1991 around the time of the breakup of the USSR. The National Bank of Moldova licenses, supervises, and regulates the activity of financial institutions.

At the end of 2018, 11 banks licensed by the National Bank of Moldova operated in the Republic of Moldova. In accordance with the banking supervision priorities and the commitments assumed towards the development partners in strengthening the transparency of the shareholders’ structure for the banks, significant changes, related to the acquisition of shares in the capital of certain banks by several reputable international groups, were made in 2018. As a result, more than 70% of bank assets are being managed by international groups with a sound reputation.

In contrast to the West, banks still play a minor role in the country’s economic development and business activity. Moldova’s high credit risk and inflation rates determine the high interest rates on limited bank loans. A persistent problem in the banking system is the insufficiency of funds with longer tenors. The population often opens deposits for periods less than 12 months. Loans and state treasury bills provide limited diversification for the banks’ assets because Moldova’s stock market remains underdeveloped and provides limited options for long-term investments. As a result, banks have to rely on long-term credit lines from the World Bank, the European Bank for Reconstruction and Development, and other international financial institutions to lend long term.

Foreign investors’ share in Moldovan banks’ capital is around 81%, although ultimate beneficial ownership and lack of clarity calls that statistic into question. A crisis at three Moldovan banks, two of them being among the country’s top five, in late 2014 called into question the soundness of the banking system, which has yet to recover from the fallout. Authorities responded by strengthening the independence of the regulating bodies and enhancing the tracking of bank shares. 

Law on banks’ activity, which modernised the regulation and supervision standards in the banking sector, came into force on 1 January 2018. The law provided improvements to the corporate governance framework of the banks and their obligation to hold adequate share capital in relation to the assumed risks. The law will contribute to the harmonisation process of the national banking legislation with international principles and standards.


In 2017, there were 36,7 doctors and 69,2 medical staff per 10 000 inhabitants. Compared to previous years there is a reduction in the number of beds, per 10 000 inhabitants there were 52 beds.

Most often, the population suffers from respiratory diseases, complications of pregnancy, traumatic injuries and poisonings. Despite rising budgetary spending, public health care remains extremely under-financed. Consequently, the mortality rate of the working-age population and private expenditure on health care remain among the highest in the European region of WHO.


The efficiency of the Moldovan social assistance system is still very limited due to the bad financial condition of the country. Additionally, there is no equal distribution of welfare. Some citizens (judges, civil servants, members of parliament) are privileged with special pension terms such as lower retirement age. Proper targeting of assistance also remains a problem.

In 2017, a pension reform was initiated. Since then, the retirement age has gradually increased each year. The retirement age was intended to reach 63 years in 2019 for men and 2028 for women. Prior to the reform, men retired at the age of 62 and women at the age of 57. In the second half of 2018, average pensions increased in comparison to January 2016 by 43% and amounted to $97 per month, finally exceeding the Moldovan subsistence minimum ($91.5 per month). However, pensions for various officials (e.g., judges) increased disproportionately to people working in the private sector. The average unemployment benefit was also raised and currently matches the average pension payment.

Legal improvements notwithstanding, inequality in Moldova remains relatively high. Although women represent 52% of the population, they remain underrepresented in public offices and businesses. In 2018, women accounted for only a little more than 20% of the total number of members of parliament.