Marina Soloviova, Programme Director for Economic Policy at Expert-Grup and economic expert, gave an interview for the FES/APE foreign policy newsletter. During the discussion, we addressed the economic successes and failures of the Republic of Moldova in 2025, as well as the prospects for the coming year in terms of reviving the national economy. We discussed ways to attract investment, priorities for the use of European funds, and how to create better conditions for both economic agents and workers. All these issues are explored in the interview below.

If we were to take stock at the end of 2025, how would you assess Moldova’s economic progress and failures this year?

Among the progress made on the economic front, I would mention several important aspects. First, the resumption of economic growth in the second half of the year, with real GDP increasing by 5.2% in the third quarter of 2025 compared to the third quarter of 2024, a development mainly driven by the recovery of agriculture. This growth followed a complete lack of economic growth in 2024 and the first half of 2025. Overall, in the first nine months of 2025, the economic growth rate stood at 2.0%.

In terms of entrepreneurship, the number of newly registered businesses in the first seven months of 2025 reached 5,900, an increase of 15.8% compared to the same period last year.

Regarding investment activity, in the first half of 2025, gross fixed capital formation increased by 25.3% in real terms compared to the first half of 2024. In particular, investments in machinery and equipment rose by 27.8%.

As regards the development of financial infrastructure, the acceptance of Moldova’s application to join the Single Euro Payments Area (SEPA), which became operational in October 2025, as well as the implementation of the MIA Business solution within the MIA Instant Payments system — already used by over 3,000 companies for P2B payments — are noteworthy.

With regard to final household consumption, despite weak household income dynamics, it remained stable in the first nine months of 2025 and even recorded a 3.7% increase in real terms compared to the corresponding period of 2024.

However, 2025 was also marked by a series of setbacks. One of these is the economy’s continued vulnerability to climate change. More specifically, extremely volatile results in agriculture continue to significantly influence overall economic growth, demonstrating that Moldova’s economy remains exposed to fluctuations in climatic conditions.

There has also been a record deterioration in the current account balance. Against the backdrop of persistent structural competitiveness problems among domestic producers, growth in final consumption has not sufficiently supported domestic production, being predominantly oriented towards imports. As a result, the current account deficit reached 23.3% of GDP in the first half of 2025, a level last recorded in the first quarter of 2009.

At the same time, household financial vulnerability has increased. The aforementioned growth in consumption was associated with a significant increase in the volume of new loans granted to individuals (+53% in the first half of 2025 compared to the first half of 2024). The boom in lending to the population, coupled with modest income growth, could become a “time bomb” in the event of destabilisation in the labour market or the financial sector. Indeed, the rate of non-performing mortgage loans is already on the rise.

Another major problem is the increasing difficulty of accessing housing. Residential property prices have risen faster than overall inflation and have doubled compared to 2019 (the residential property price index reached 222% in the second quarter of 2025, with 2019 = 100). This development was driven, among other factors, by an approach to housing access focused mainly on the demand side, through programmes such as “Prima Casă Plus” (First Home Plus), while the supply side was neglected — a dynamic that contributed to rising prices.

Last but not least, the failure to implement the programme negotiated with the International Monetary Fund also represents a significant setback. In particular, the Government of the Republic of Moldova committed to broadening the tax base and reviewing unjustified preferential tax regimes starting in January 2026, with the aim of increasing annual budget revenues by at least 900 million lei compared to the current policy. This provision of the programme, although essential for strengthening public finances and increasing the state’s capacity to meet its social objectives, has not been implemented.

Modest yet improving prospects

What are the economic prospects for 2026? Will it be possible to achieve sufficient economic growth next year in light of the reforms envisaged by the Government of the Republic of Moldova?

Modest economic growth of around 2–2.5 percent is anticipated in 2026, with growth accelerating to 3–3.5 percent in subsequent years, particularly against the backdrop of a recovery in agriculture, although uncertainty surrounding climatic conditions remains a significant risk factor.

Industry is also expected to return to a positive trend, mainly as a result of the revival of the food industry and construction-related sectors. The services sector will continue to be an important source of economic growth, especially through construction and IT. However, annual economic growth rates of 2–3 percent are not sufficient to generate a real economic leap.

Growth-generating investments

What measures do you consider necessary to ensure more robust economic growth that have not yet been implemented by the authorities? What kind of dialogue does civil society have with the authorities in this regard, and to what extent are recommendations from civil society in the economic field taken into account?

In order to accelerate economic growth, state programmes and policies must prioritise attracting investment in economic activities that generate higher added value, such as processing local raw materials, creating and promoting domestic brands, and automating and technologising production processes across all sectors of the national economy. A key priority in this regard is capitalising on the Growth Plan for Moldova launched by the European Union.

The business environment needs regulatory stability and early consultation in the process of transposing the acquis communautaire. Given that compliance costs disproportionately affect small and medium sized enterprises, these can be mitigated through support from pre-accession funds and through advance communication of legislative changes. It is also necessary to support exporters through a set of measures, such as the full liberalisation of freight transport between the Republic of Moldova and the EU or, at least in the short term, an increase in the number of CEMT multilateral authorisations, in order to improve access to and competitiveness of domestic goods on the European market. At the same time, investments in quality infrastructure are needed to facilitate local producers’ access to foreign markets.

Access to finance remains limited for many small and medium-sized enterprises. In this context, developing the domestic financial market and stimulating alternative financing instruments could accelerate the mobilisation of private investment and support the structural transformation of the economy.

Expert-Grup actively participates in the development of state economic policy documents. However, the real participation of civil society in the decision making process is often constrained by the authorities’ failure to comply with transparency requirements. For example, the draft law on the rectification of the state budget for 2025, referred to by the government as “Budget Plus”, was approved with virtually no public consultation, even though it included important changes related to the use of EU financial support under the Economic Growth Plan.

It has also become common practice for annual budget bills to be approved late and on an emergency basis, without giving civil society a real opportunity to analyse and submit proposals. For instance, only four days were allocated for public consultation on the draft state budget law for 2026, between 2 and 5 December 2025.

Coherence and consistency for European funds

How do you assess the implementation of European Union requirements in the economic field? What do you see as the main achievements and shortcomings from the perspective of EU requirements and recommendations? At the same time, how do you assess progress in implementing the Growth Plan for 2025? Do you see any risks that the Republic of Moldova may not be able to fulfil the commitments required to benefit from the next tranche of funding?

In October 2024, the European Commission proposed a Growth Plan for the Republic of Moldova worth €1.9 billion. In order to capitalise on this financial support, the Reform Agenda for the Growth Plan for Moldova for the period 2025–2027 was approved. Its key objectives include strengthening the competitive framework, developing infrastructure, improving access to finance, and strengthening consumer protection in order to align with European Union rules and standards.

The implementation of this plan has a dual significance. On the one hand, it is a public policy instrument designed to accelerate structural change by promoting innovation, digitalisation, and sustainability in the business environment. On the other hand, the plan serves as a mechanism to prepare the national economy to compete in the European Single Market.

The success of the Reform Agenda depends on several critical factors, including the coherence and consistency of implementation, the institutional capacity to effectively manage the European financial resources allocated through the Growth Plan, and the active involvement of the private sector and civil society in the monitoring process.

Fairness in growth and spending

How do you assess the budget law for 2026? How important is it to have wage and pension increases next year, and to what extent can these increases be sustainable from an economic growth perspective? How do you view the fact that only certain categories of civil servants will benefit from wage increases, and do you consider this approach to be fair?

From the 2026 budget law, recently approved by Parliament in its first reading, we note that national public budget revenues will remain constant at 35 percent of GDP in both 2025 and 2026, while budget expenditure is increasing — from 40 percent of GDP in 2025 to 41 percent in 2026. This development will inevitably lead to an increase in the budget deficit. In this context, the state does not appear to be paying sufficient attention to increasing tax collection, despite the existence of chronically underfunded socio-economic needs.

Thus, taxes and fees projected to be collected in 2026 will see only a marginal increase, from 21.4 percent of GDP in 2025 to 21.7 percent in 2026. This dynamic indicates a lack of firm commitment on the part of the authorities to review unjustified tax exemptions, as provided for in the programme negotiated with the IMF, or to increase the collection of property taxes, which remains extremely low in the Republic of Moldova (only 1 percent of total tax and fee revenues).

On the state budget expenditure side, some positive developments can be identified, such as increased allocations for environmental protection and support for small businesses. At the same time, there are also negative developments, including the lack of real growth in allocations for education — the increase is only 4 percent, corresponding to the inflation forecast for 2026 — even though investment in education is a pressing necessity for economic growth, as highlighted in the 2025 State of the Nation Report. Also noteworthy is the 10 percent reduction in budget allocations for family and child protection, despite the fact that families with children are the group most affected by both monetary and multidimensional poverty.

The state social security budget provides for a modest increase of only 4 percent in both revenues and expenditures. Even though the BASS’s own revenues for 2026 are estimated to increase by 12 percent due to growth in the economy’s wage fund, total revenues will increase at a slower pace as a result of the state’s decision to reduce transfers from the state budget to this fund.

Another shortcoming is the insufficient increase in the statutory minimum wage — less than 15 percent, from 5,500 lei to 6,300 lei — given that trade unions have requested it be set at 8,000 lei in order to comply with the European standard of 50 percent of the average wage. As a result, the minimum wage will remain at virtually the same relative level: 35 percent of the average wage in 2025 and 36 percent of the average wage forecast for 2026. One of the arguments put forward by the government was the potential negative impact on the business environment; however, most employers in the private sector already offer wages higher than the minimum wage proposed by the trade unions, with the possible exception of the agricultural sector.

In reality, the impact of a higher minimum wage on the business environment would more likely be a reduction in “envelope” payments — that is, the difference between the declared minimum wage and the actual wage paid. A substantial increase in the minimum wage would indeed pose challenges, especially for the public sector, but it is a challenge that the state not only has the capacity to address, if there is political will, but also the obligation to meet if the Republic of Moldova genuinely seeks EU membership. Economic convergence with the European Union is not possible without corresponding social convergence.

Balance and diversification of investment options

How can the Republic of Moldova become more attractive to foreign investors? Are investors currently reluctant solely because of the war in the neighbourhood, or are there other factors that are discouraging them from investing in the Republic of Moldova at this stage?

The security crisis has certainly affected investment flows, but these were not significant even before the war broke out. From the investors’ perspective, the key elements are security — both geopolitical and economic, meaning the absence of currency, banking, or other macroeconomic crises — attractive risk-adjusted returns, functional state institutions (especially the justice system), developed infrastructure, and the availability of a sufficiently large and adequately skilled workforce.

One of the mistakes in economic policy was the perpetuation of the neoliberal model inherited from the 1990s, based on low costs — in particular cheap labour and relatively low taxation compared to European countries. In the attempt to offer investors the lowest possible costs, the state lost human capital — with the stock of emigrants from the Republic of Moldova estimated in 2024 by the UN Department of Economic and Social Affairs at over 860,000 people — allowed the deterioration of institutions in the context of the deprofessionalisation of the public service caused by low remuneration, and underfunded investments in infrastructure.

Paradoxically, the very factors that were meant to attract investors — low wages and low taxes — have now become obstacles to investment, leading to labour shortages, dysfunctional institutions, and underdeveloped infrastructure. The solution lies in finding a reasonable balance between the need to adequately finance the state’s objectives and the current economic capacity of society. Tax exemptions and subsidies for the business environment should be maintained where they generate clear economic benefits, but they must be well justified and limited in time.

Another important element in attracting both foreign and domestic investment is the development of the capital market in the Republic of Moldova, including the introduction of new financial instruments, diversification of investment options, improved access for companies to long-term financing, and the strengthening of the financial intermediation sector. The recent scandal involving an investment platform that operated as a pyramid scheme has shown that individuals in Moldova are interested in investing, but are unable to channel this interest into productive purposes due to the limited options available on the domestic capital market. Currently, investment opportunities are almost exclusively limited to bank deposits and government securities, which are characterised by low risk and low returns.

At the same time, businesses face insufficient access to finance, meaning that demand for capital does not meet supply, against the backdrop of an underdeveloped capital market.

Thank you!