Beyond dependency: Why Moldova must pivot from budget support to industrial investment by 2030
The Republic of Moldova faces a critical structural crossroad, risking long-term dependency on external funding and consumption unless it undergoes radical economic reforms.
According to a study by economic expert Mihaela Sirițanu, the nation’s primary challenge lies in its low absorption capacity of European funds available through the EU Growth Plan. While financial support is at an unprecedented high, administrative weaknesses threaten to neutralize its potential impact.
The administrative bottleneck
Currently, nearly 40% of the allocated EU funds are already in Moldova, yet the government lacks transparent reporting on their utilization. Sirițanu warns that a significant portion of these funds is directed toward general budget support—covering immediate expenses rather than fueling long-term growth.
"The paperwork looks promising, but practical implementation faces severe risks," Sirițanu stated. She emphasized that without strengthening administrative capacity, the country might fail to absorb these resources, resulting in zero net economic impact.
The illusion of industrialization
The study highlights a disconnect between official plans and reality. Moldova’s industrial parks and business incubators often function as mere real estate facilities rather than hubs for innovation or value-added production.
To rectify this, the expert suggests a shift toward specialized parks, citing the IT sector as a successful precedent. "Industrialization requires specialization," she explained, noting that current reporting methods prevent citizens from tracking how these funds influence national development.
A liquidity paradox
A major hurdle for local entrepreneurs is the "banking paradox." Moldovan banks currently hold approximately €305 million (approx. 6B MDL) in dormant, inactive liquidity. Despite this, only 38% of firms manage to secure loans.
Banks remain excessively conservative, refusing to provide the long-term credit necessary for business scaling. Furthermore, state grants via the Organization for Entrepreneurship Development (ODA) average only €20,000—a sum Sirițanu deems insufficient for companies aiming to enter the EU market. For comparison, Estonian startups often receive up to €500,000 during their scaling phase.
Strategic financial reset
To build a resilient economy, Sirițanu proposes the creation of a public-private fund where the state invests alongside private capital. A key component of this reform is the revitalization of the domestic capital market.
By developing private pension funds and insurance schemes, Moldova could accumulate domestic capital to be redirected through the Stock Exchange. This would allow the state and local businesses to borrow in national currency, reducing dependency on high-interest foreign debt and building a truly sovereign, resilient economy by 2030.
Translation by Iurie Tataru
