INTERVIEW: Moldova replaces Ukraine as darling of donors

By bne IntelliNews April 22, 2010

Graham Stack in Chisinau -

A year ago, Moldova suffered Kyrgyzstan-style public disorder following contested elections, which ended with a new pro-EU government pushing a reform agenda taking power. Lenders and investors took note, and on March 24 the Moldova Partnership Forum brought together sponsors and investors at a major donor conference in Brussels.

"The Moldova Partnership Forum held in Brussels was about two important things: trust and commitment," Melanie Marlett, World Bank country head for Moldova, tells bne. "Trust from the international community in the government's reform programme and commitment to supporting Moldova's development and modernization agenda."

As well as a total of $2.6bn pledged by institutions for critical investments in roads, access to water and sanitation, agriculture, energy, health, regional development and social protection, the March conference was also about positioning Moldova as the entirely unexpected star pupil from among the EU's "Eastern Partnership" pupils, says Marlett. The small country often cursorily referred to as "Europe's poorest country" has leapfrogged established reform favourites such as Ukraine. "Moldova's commitment to European integration and its willingness to embrace change and implement even tough reforms has put Moldova on the map in Brussels in a very positive way," Marlett enthuses.

This optimism is all the remarkable given that the crisis hit Moldova late but very hard. "Moldova's economy has been severely weakened by the global crisis," Marlett acknowledges. From 2000-2008, growth averaged 6%, led by consumption financed from remittances from Moldovan migrants. The crisis exposed the vulnerability of this growth path, with remittances falling by 29% in 2009, GDP by 6.5% and household consumption by around 12%.

But the new reformist Alliance for European Integration, taking office after nine years of Communist Party rule, quickly developed an Economic Stabilization and Recovery programme focusing on putting the country's finances in order, liberalizing markets and improving the business environment, and thus successfully garnered international financial support when in January the International Monetary Fund (IMF) agreed to lend it $574m.

Singapore on the Dniester

But this won't be sufficient on its own. "The global economic crisis has exposed the vulnerability of a remittance-based growth model. Moldova needs to start thinking about its future growth model. What are the potential sources of growth for Moldova?" asks Marlett. Here, World Bank thinking takes on board not only European, but also Asian, specifically Singapore's, experience with information and communication technologies (ICT).

IT currently constitutes 10% of Moldovan GDP, with 25,000 employed in the sector, according to statistics provided at an USAID Information and Communication Technology Summit in Chisinau on March 30. "The experience of countries like Singapore transforming the way government does business through the use of ICT is an example of how modern technology can reduce public spending, eliminate the human factor and thus minimize the risk of corruption, and deliver a better, faster and cheaper service to citizens and businesses," argues Marlett. The World Bank has consequently helped launch an ICT partnership between the two states, with Moldova signing an agreement with Singapore to draw on its experience.

A major obstacle, though, is that Moldova still has a criminally low broadband internet penetration of around 6% - not surprising considering a majority of the population is rural. "The government recently approved a decision to liberalize international broadband Internet connectivity. This will increase competition on the domestic market and lower internet costs for the end user."

In addition to the use of broadband, the World Bank is also exploring the use of mobile services - eg. m-banking, m-health, m-agriculture - as a way to reach an even wider audience, as penetration of mobile telephone use in Moldova is 70%.

These ideas have been incorporated into the government's own reform programme called "Rethink Moldova" that was endorsed at the donor conference. Among the more specific measures proposed is the restructuring and even privatization of national telecommunications provider Moldtelecom and the building of technology parks. A study by EU technical experts identified five potential locations for industrial parks, requiring estimated investment of €73m. The government is also planning investment in optical fibre infrastructure and an on-ground digital television network.

The global media labeled last year's Chisinau protests as the "Twitter Revolution," but it was more a case of Twitter putting Moldova on the map than vice versa: protest leader Natalia Morar later acknowledged that she had only opened a Twitter account the day after the protests occurred, with "traditional" Russian social networks such as and playing the key role. But this is still a strong indication of connectedness among the younger generation, and of the potential for social change of ICT that Moldova appears to be placing much of its hopes upon.

Related Articles

Macedonia kept on hold as Balkans edges towards EU goal

Clare Nuttall in Bucharest -   Macedonia’s EU accession progress remains stalled amid the country’s worst political crisis in 14 years, while most countries in the Southeast Europe region have ... more

Mystery Latvian linked to Scottish shell companies denies role in $1bn Moldova bank fraud

Graham Stack in Berlin - A Latvian financier linked to the mass production of Scottish shell companies has denied to bne IntelliNews any involvement in the $1bn Moldovan bank fraud that has caused ... more

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.