Video conference with Moldova’s Prime Minister Ion Chicu and the German Economic Team

The German Economic Team held a video conference with the Moldovan Prime Minister Ion Chicu on 04.05.2020 on the economic situation, the economic effects of the corona crisis and support measures to boost the economy.

Ricardo Giucci, head of the German Economic Team (GET), explained that as a result of the Corona crisis, a severe recession and a decline in GDP of 6.3% is expected this year, with consumer demand and investment particularly affected. The sharp decline requires correspondingly ambitious support measures. On the positive side, it should be noted that the containment measures are effective and the incidence of infection has weakened. Another positive aspect is that the Moldovan government was able to secure emergency loans, which at least covered short-term financing requirements.

Jörg Radeke, Project Manager Moldova, added that a recovery is expected in the second half of the year and a robust growth of 5.5% in 2020. However, this will require further efforts and economic support measures from the government. In this context, the German Economic Team recommends to formulate a clear exit strategy with clear criteria for easing and avoiding a second wave of infection in order to support the consumer and business climate. In addition to the measures already initiated, a loan guarantee programme – similar to the KfW loan guarantee programme in Germany – should be considered. GET also offers to help adjust investment promotion activities in order to retain existing investors and to benefit from a possible relocation of production capacities. A temporary change in the insolvency law is also recommended.

The Prime Minister thanked for the briefing on the economic situation. He provided information on the numerous measures already taken to support the economy and on further initiatives that the government is currently preparing. He would be grateful for advice on investment promotion in Corona times, said Prime Minister Chicu. A temporary adjustment of the insolvency regulation is also of interest and consultation is desired. The government is considering interest rate subsidies as an instrument for supporting investment demand. The Prime Minister expressed confidence in further advisory support on reform issues in the future.

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