PAS MP Radu Marian gave an interview for the FES/ APE Foreign Policy Bulletin about the government’s plans for the “Budget + Plus” programme through which the current pro-European government in Chisinau aims to revive the economy of the country. We discussed about the intentions and especially the architecture of this programme, which is designed to generate development in the coming years so that Moldova can continue on its European path. We invite you to read more in the interview below:

What is this “Budget + Plus” programme and what are your hopes as a governing party with this project in terms of improving the lives of Moldovan people?

This “Budget + Plus” programme comes as a result of EU support. We are talking here about the EUR 200 million grant aimed at supporting our citizens and businesses as a result of the rise in electricity prices, a reality brought about by one of the episodes of energy blackmail by the Russian Federation.

We are also talking about the economic growth programme. More specifically, it’s the first tranche of €200 million that came this spring, designed to accelerate economic development.

So, “Budget + Plus” has two components: the first component is the grant that has already been partly used to support our citizens with their energy bills, and the second part is a loan for growth measures. Our objective with this economic growth programme – we are talking about EUR 1.9 billion coming in the next three years –is to have an annual economic growth of at least 5 percent.

What we have approved so far for the “Budget + Plus” is a first step. It is only a small part of this major objective of ours, which is to accelerate our economic growth.

Is this project being funded solely from this €1.9 billion in EU financial aid or will there also be money from the state budget?

That’s what this is all about, and that’s the €200 million, the second part that came from the economic growth programme. That is why we also made this rectification that we called “Budget + Plus”.

Normally the budget adjustment is normally done in July, but in this case we are talking about exceptional funding from the EU through the EU’s economic growth programme. Therefore, we have made this adjustment now. Most of the money for this programme comes from the EU.

Electoral purposes or pragmatic goals?

There is also this aspect of some criticism of PAS, namely that this EU aid would also be used for electoral purposes, because it somehow comes before the parliamentary elections. How do you assess such allegations?

Practically all the last years have been election years - 2022, 2023, but also 2024. Every year we had support from the European Union and every year we provided support for infrastructure, for citizens, support for bills and so on.

So, such statements do not hold water, because in this logic we should never have come up with measures to support the economy and citizens. And this programme, unlike other external funding, is basically focused on capital investment and growth.

I am talking about one billion MDL for the development of villages, towns, cities, local roads, and so on. Another billion MDL will be allotted for regional roads, 200 million MDL for business support, 200 million MDL for agriculture, 60 million MDL for young people to encourage them to take their first job, which will come with an allowance of 3,000 MDL per month.

This is the difference between the “Budget + Plus” and the previous years’ support packages from external partners. In general, this money has reached the Republic of Moldova also thanks to the credibility of the PAS government and its president, Maia Sandu. Obviously, this is only a small part of what could follow if the country continues on its European path and has a pro-European parliamentary majority.

Consultations with civil society and experts

But why was this programme rushed through Parliament and hardly discussed in public debates?

In the Parliament’s Committee on Economy and Budget, we have a council of experts which includes representatives of civil society organizations and experts with whom we have discussed this budget. We asked them how to better spend this EU money and we got feedback. We were told that we need private investment and we need to stimulate business investment. We are doing this also through programmes like the “373” programme on loan guarantees or public investment in roads, schools and so on. But broadly speaking we need to make sure that this money is absorbed and spent. We cannot, for example, spend two months in public consultations.

In general, for rectifications and draft budgets, there is a very strict timetable, namely 10-14 days. You always have to make sure that the law is passed so you can absorb the money.

For example, Expert-Grup is a member of this Council of Experts of the Parliamentary Committee on Economy and Budget. We invited them and had a meeting at the Economic Committee to discuss this issue. We also asked them how they think it would be better for the state to spend this money. We meet in this Council of Experts format periodically to discuss proposals and feedback.

Energy independence

In terms of energy resilience, for which some 4 billion MDL will be spent, what major projects will be launched? Can we become more energy independent from Russia due to this programme?

Regarding the first component of the “Budget + Plus”, there are fewer energy projects and more environment and sustainability ones that will help us anyway.

We indirectly support energy resilience. For example, we are additionally funding ODA programmes, the “373” programme and others that businesses are very actively using to install solar panels or energy storage stations. These all contribute to energy resilience.

We have made very good progress in energy independence, especially in natural gas, so we are no longer dependent on a single source. We are making rapid progress on the construction of the Vulcanesti Chisinau line, as well as on the co-production of renewable energy.

As for the renewable energy, a record has been set since Moldova’s independence from the Soviet Union, when renewables account for 36 percent of total consumption. This is due not only to private investment, but also to the efforts of the government, which has come up with interest subsidies and legislative changes to simplify the procedures for installing solar panels or wind power plants.

It is worth mentioning that the growth programme will have a lot of components in the next three years on the energy resilience – storage, balancing stations. More specifically, if we can produce a lot of solar energy, we will also need balancing, for example, for conditions when there is not enough sun or wind. So we need to invest a lot in energy storage so that when you have excess electricity, you can store it and then use it when you need it.

Therefore, we will invest heavily in this sector through the economic growth programme over the next three years. This is a unique opportunity for the Republic of Moldova. If we move fast, this will influence the European path and the European accession of the Republic of Moldova, as well as the credibility that this government has with international partners.

Will money from the “Budget + Plus” programme be also allocated for the Suceava-Balti high voltage power line linking Moldova to Romania? When exactly do you expect it to be voted in the second reading and when will the first payments be made under this programme? Do you have a precise timetable?

We will soon have the plenary session and we will vote the “Budget + Plus” programme in the second reading. For the Suceava-Balti power line project we have funding from another programme. We will declare this project to be of public utility, which means that the government will be able to move much more quickly for reserving and expropriating land and so on, so that we can get this line up and running in the next two and a half years.

The Chisinau-Vulcanesti line, complemented by this Balti-Suceava line, will not only help us solve our biggest problem – vulnerability to the separatist regime in Tiraspol – but will also give us more export capacity to the European Union via Romania. So this project is a crucially important one.

Boosting the economy

Let’s talk about the other half of 4 billion MDL and what it means for economic development. What exactly does this entail?

There are several components. In general, you need several things to achieve economic growth. You need consumption, public investment like roads, schools, etc. Last but not least, you need private investment. Then we talk about the trade balance. These 4 billion MDL must be used for two things, namely capital investments where we will allocate one billion MDL for regional roads, another billion for the “European Village” programme, another billion for local roads and courtyards in Chisinau. This will be public spending.

Such investments will not only generate jobs, for example by the companies that will hire people to build those roads, but they will also buy raw materials, and so on.

More importantly, such projects actually help people. When a local road is built, big companies are looking for labour in every village. Obviously, it is much easier to commute to work when you have a good road, which will directly and indirectly help economic development.

So I was talking about the one billion MDL for local projects and one billion MDL for regional roads. Another 200 million MDL will be allocated for ODA programmes. Similarly, we will subsidize interest for economic agents in the “373” programme or guarantee loans. This amount may seem small at first glance, but this is how the so-called “leverage effect” is produced. This is an investment strategy by using borrowed money, in particular by using various financial instruments or borrowed capital to increase the potential return on an investment.

What do we do? When a business, for example, wants to take out a loan of 10 million MDL to build a production line and has no collateral or the interest rate is too high, then the state intervenes and subsidizes the interest. The state guarantees the loan and then we have this private investment by the company, which would not have taken place if the state had not intervened with partial aid.

With this amount we can generate much larger investments. For example, the “373” programme, with several tens of millions invested in the form of budgetary allocations, has generated an economic impact, namely investments in the economy of four billion MDL in the last two years.

In addition to the 200 million MDL for the ODA programmes, we also have another 200 million MDL for agriculture, more specifically for animal husbandry, which is a growing area. Plus another 200 million MDL for schools and the repair of canteens, which again is a capital public investment. All these investments will generate jobs and create better conditions for children. From September 1st, free meals will be introduced for pupils from grades five to nine.

Last but not least, we will also provide 60 million MDL for youth programme. So, for young people who start their first job, the state will provide financial help. This will be for young people entering key sectors such as building materials, furniture manufacturing, food processing, chemicals, pharmaceuticals, automotive or creative industries.

More specifically, the state will provide these young people with 3,000 MDL per month for one year. It remains to be seen how this programme will work, but we plan to expand it depending on the results and popularity among young people who take up the job.

Thank you!