Leu (plural: Lei)
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Formerly ruled by Romania, Moldova became part of the Soviet Union at the close of World War II. Although independent from the USSR since 1991, Russian forces
have remained on Moldovan territory east of the Nistru (Dnister) River supporting the Slavic majority population, mostly Ukrainians and Russians, who have
proclaimed a "Transnistria" republic. One of the poorest nations in Europe and plagued by a moribund economy, in 2001 Moldova became the first
former Soviet state to elect a communist as its president.
Update No: 259 - (25/07/02)
Moldova is the one country in Europe that has elected back the communists - and the rich irony is that the US and the EU are rather glad!
The West was becoming very fed up with the deeply corrupt ways of the old regime before March 2001. The communists at least have a theoretical ideal of public
morality. Whether they live up to it or not is another matter. But at least they have it.
The Moldovans have bucked the trend. Everywhere across Europe there has been a right-wing advance, notable now in France, while Socialists, as in Hungary, or
New Labourites as in UK, emulate right-wing ideas. But the Moldovans, frustrated by years of right-wing politicians themselves a reaction but who failed to
deliver, voted back the communists last year.
They have now been in power for over a year and are even more popular than on election day, when the Communist Party won just over 50% of the seats, voting in
a new president, Vladimir Voronin, as is the custom in Moldova. He has been largely a success explaining his 73% approval rating in the polls.
The Putin of Moldova?
Voronin has a harder job on his hands than any other leader in the former Soviet Union. The economy has crashed to one third of its size at independence in
1991. The collapse was further accentuated by the de facto defection of Trans-Dnestr, itself with one third of the national economy, the base of much of the
Some Moldovans, ethnic Romanians, yearn for a re-union with Romania, which in pre-war days possessed Bessarabia until it was rudely snatched by Stalin in
1940 (on an agreement with Hitler in the Nazi-Soviet Pact). Many took to the streets to demonstrate against the turn towards Russia and the Russian language
which the Communists initiated earlier this year. The struggling Romanians however, have enough on their plate without salvaging the basket-case of Moldova.
So do the Russians. The idea of it joining the Russia-Belarus Union is still a pipedream, as indeed is that Union itself.
The economy is fitfully growing, GDP rising by 2.1% in 2000, by 4.5% in 2001 and prospectively by 3.5% in 2002. Foreign direct investment is derisory,
US$100m in 2000, US$60m in 2001 and provisionally US$235m in 2002, something of an improvement. Moldova is cooperating with the international financial
institutions, which it will need to do if more FDI is to be forthcoming, establishing clearer laws for business, a more open judiciary and a level playing
field for all. Much remains to be done.
Air Moldova in Brazil deal
Air Moldova will take delivery of two Brazilian-built jets, the first time the airline has purchased aircraft produced outside the former East Bloc, Infotag
Two Embraers 145 aircraft capable of carrying 49 passengers will be added to Air Moldova's fleet of nine planes. The two jets cost US$36m, which was split
nearly evenly between Air Moldova and Germany's Dresdner Bank.
Fitch IBCA Lowers Moldova's Rating to "DD"
The Fitch IBCA international agency has lowered Moldova's rating to "DD". Deputy Minister of Finance, Mariana Durlesteanu, who heads the Moldovan delegation
to negotiations with main holders of Moldova-issued Eurobond, told INFOTAG that, from the technical viewpoint, the rating lowering is quite a grounded,
Moldova has failed to repay the Eurobond by June 27th, which can be classified as a technical default - the borrower's failure to meet his commitments.
Local banking experts are saying, however, that nothing special is going to happen, because Moldova now cannot and is not intending to borrow commercial
loans from foreign markets. If the IMF Board decides positively on July 10th concerning lending resumption for this republic, the Moldovan Government will be
able to obtain credits on the most advantageous terms - with repayment in 30-40 years at an interest rate of 0.75% p.a.
Despite the rating downgrading from CC to DD, Fitch has kept unchanged the Moldovan national currency rating - CCC, remarking that, in a perspective, the
lei's rating may be revised from "negative" to "stable".
Fitch mentioned as a positive factor and merit for Moldova the restructuring of Eurobond payments. Major bond holders gathered in London on June 25th, and an
overwhelming majority of them voted for restructuring, with conditions to be defined by the International Monetary Fund. The Moldovan Ministry of Finance
issued the US$75 million Eurobond in 1997.
INFOTAG has learnt from reliable sources that the Eurobond holders agreed to restructuring of payments within 5-7 years at an interest rate of 7% p.a.
Compared with the restructuring terms attained by Ukraine, the Moldovan terms seem really attractive, if one takes into account that 5 years ago Moldova
placed the papers at an interest rate of 9.75 per cent.
Local bankers hope that the IMF's positive solution on July 10th will open the door for Moldova to the Paris Club for restructuring the country's external
FOREIGN ECONOMIC RELATIONS
Moldovan foreign minister visit to Italy
Moldova's Foreign Minister, Nicolae Dudau, made a working visit to Italy on 3rd-5th July to sign a series of bilateral agreements, Basapress News Agency has
Dudau met the Italian Foreign Ministry's state under-secretary, Roberto Antonione, Minister for EU Policy Rocco Butiglione, Labour Minister Roberto Maroni,
Chamber of Deputies Vice-Chairman Fabio Mussi and the chief of the parliamentary commission for foreign policy, Gustavo Selva.
The Moldovan minister was to sign agreements on organised crime, double taxation, fiscal evasion and readmission of illegal migrants...
Government to get WB credits
The Moldovian Ambassador to the United States, Mihai Manoli, and the World Bank (WB) Vice President, Joahannes Linn, signed in Washington on June 26th an
agreement between Moldova and the bank's International Development Association (IDA) for two credits worth a total of US$40.5m, RFE/RL reported.
Some US$30m will be used to support medium-term economic development and reform, and US$10.5m will be used to fund a rural investment and services project.
The credits will be disbursed on standard IDA terms and will be repayable in 40 years, with a 10-year grace period for the rural project. Since Moldova
joined the World Bank in 1992, commitments to the country total some US$500m for 15 projects
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