Moldova

Leaders

President Igor Dodon
Prime Minister Pavel Filip

Background

Part of Romania during the interwar period, Moldova was incorporated into the Soviet Union at the close of World War II. Although the country has been independent from the USSR since 1991, Russian forces have remained on Moldovan territory east of the Nistru River supporting the breakaway region of Transnistria, composed of a Slavic majority population (mostly Ukrainians and Russians), but with a sizable ethnic Moldovan minority. Years of Communist Party rule post-independence ultimately ended with election-related violent protests and a rerun of parliamentary elections in 2009. Since then, a series of pro-European ruling coalitions have governed Moldova. As a result of the country's most recent legislative election in November 2014, the three pro-European parties that entered Parliament won a total of 55 of the body's 101 seats. Infighting among coalition members led to prolonged legislative gridlock and political instability, as well as the collapse of two governments, all ruled by pro-European coalitions centered around the Liberal Democratic Party (PLDM) and the Democratic Party (PDM). A political impasse ended in January 2016 when a new parliamentary majority led by PDM, joined by defectors from the Communists and PLDM, supported Pavel FILIP as prime minister. Moldova remains Europe's poorest economy; the country signed and ratified an Association Agreement with the EU in 2014, which fully entered into force in July 2016 after ratification by all EU member states.

Economy

Despite recent progress, Moldova remains one of the poorest countries in Europe. With a moderate climate and productive farmland, Moldova's economy relies heavily on its agriculture sector, featuring fruits, vegetables, wine, and tobacco. Moldova also depends on annual remittances of about $1.12 billion from the roughly one million Moldovans working in Europe, Russia, and other former Soviet Bloc countries.With few natural energy resources, Moldova imports almost all of its energy supplies from Russia and Ukraine. Moldova's dependence on Russian energy is underscored by a more than $5 billion debt to Russian natural gas supplier Gazprom, largely the result of unreimbursed natural gas consumption in the breakaway region of Transnistria. Moldova and Romania inaugurated the Ungheni-Iasi natural gas interconnector project in August 2014. The 43-kilometer pipeline between Moldova and Romania, allows for both the import and export of natural gas. Several technical and regulatory delays kept gas from flowing into Moldova until March 2015. Romanian gas exports to Moldova are largely symbolic. Moldova hopes to build a pipeline connecting Ungheni to Chisinau, bringing the gas to Moldovan population centers.The government's stated goal of EU integration has resulted in some market-oriented progress. Moldova experienced better than expected economic growth in 2014 due to increased agriculture production, to economic policies adopted by the Moldovan government since 2009, and to the receipt of EU trade preferences. During fall 2014, Moldova signed an Association Agreement and a Deep and Comprehensive Free Trade Agreement with the EU, connecting Moldovan products to the world’s largest market. Still, a $1 billion asset-stripping heist of Moldovan banks in late 2014 delivered a significant shock to the economy in 2015; a subsequent bank bailout increased inflationary pressures and contributed to the depreciation of the leu. Moldova’s growth has also been hampered by endemic corruption and a Russian import ban on Moldova’s agricultural products. The government’s push to restore stability and implement meaningful reform led to the approval of a $179 million three-year IMF program focused on improving the banking and fiscal environments.Over the longer term, Moldova's economy remains vulnerable to corruption, political uncertainty, weak administrative capacity, vested bureaucratic interests, higher fuel prices, Russian political and economic pressure, and unresolved separatism in Moldova's Transnistria region.

GDP

6.77 Billion