Moldova’s new economy minister promises a business-friendly overhaul

• Moldova was granted EU candidate status this year
• Economic problems are piling up, rising prices are fueling protests
• The war in Ukraine has exacerbated Moldova’s problems

KIEV, Dec 13 (Reuters) – Moldova’s new economy minister says he plans long-term reforms and will cut red tape to lay the foundations for a business-friendly economy and speed up accession to the European Union.

Dumitru Alaiba, appointed last month, is facing multiple crises ranging from the economic fallout from the war in Ukraine to soaring food and energy prices that have spurred street protests.

He told Reuters his priorities would be to deregulate the economy and overhaul the “cumbersome” tax system that has deterred investors, allowed corruption to thrive and starved the revenue budget.

“There is no other solution other than foreign aid (to Moldova) for the immediate term, but that doesn’t mean we intend to just keep waiting for the grants,” Alaiba said in a phone interview late Monday.

Pledged to “go big” on cutting red tape, he said it was crucial to boost an economy in which small and medium-sized enterprises make up a “microscopic” share and around 40% of economic activity is informal.

“Because of so many barriers to entry, our economy is monopolized, which makes it even more vulnerable,” he said. “And consumers pay the final price.”

EU leaders this year accepted Moldova as a candidate country, a diplomatic triumph for President Maia Sandu, who was elected in 2020 on a pro-European and anti-corruption platform.

But Moldova is heavily dependent on Russian gas, annual inflation tops 31% and the government expects a budget deficit of 3% of gross domestic product this year, which is set to double by 2023.

The country of 2.5 million people has also suffered power outages after Russian airstrikes on energy infrastructure in neighboring Ukraine, and protests have erupted over rising prices, particularly for gas bought from Russia.

Alaiba said creating fertile ground for business could help Moldova achieve double-digit growth in the coming years.

The government also enjoys a strong parliamentary majority after making electoral promises for more transparency and reforms.

But Alaiba also acknowledged that the government and business have faced unpredictability due to the war in Ukraine.

“The main problem is the uncertainty,” he said.

Reporting by Dan Peleschuk; Edited by Timothy Heritage and Tomasz Janowski

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