Moldova: Council and European Parliament agree to support reforms and economic growth with almost €2 billion

This Facility is the financial pillar of the Moldova Growth Plan, presented by the Commission in October 2024. It will support Moldova during the period from 2025 to 2027 and is expected to provide up to €385 million in grants and €1.5 billion in loans. These loans will be highly concessional, with long repayment time and advantageous interest rates.

Objectives of the Facility

The Facility will support Moldova in its EU accession process and in undertaking EU-related reforms, as well as in achieving economic convergence with the EU. It will also be instrumental in delivering the EU’s Comprehensive Strategy for Energy Independence and Resilience of Moldova, which aims to decouple Moldova from the insecurities of Russian supply of energy and fully integrate it in the EU energy market.

Payments will be subject to strict conditions in terms of the achievement of reforms set out in the agreed Reform Agenda.

The provisional agreement between the co-legislators retains the main thrust of the Commission proposal on establishing the Facility while placing additional focus on helping Moldova manage and mitigate the challenges stemming from Russia’s war of aggression against Ukraine and Russia’s attempts to destabilise Moldova.

In the provisional agreement, the Council and the European Parliament agreed to increase the overall funds by €100 million in grants compared to the initial Commission proposal. The co-legislators also agreed to increase the pre-financing rate from up to 7% to up to 18% of the total amount provided for by the Facility. This will ensure that Moldova will have at its disposal the necessary start-up funding to implement the first reforms and support its energy resilience.

Another improvement to the initial proposal is related to the governance of the Facility. The Commission is obliged to inform the Council and the European Parliament before adopting a decision authorising the payments, or when assessing that payment conditions are not met.

Next steps

The provisional agreement will now need to be endorsed by the member states’ representatives within the Council (Coreper) and by the European Parliament. It will then be formally adopted by both institutions following legal-linguistic revision.

Background

On 10 October 2024, the European Commission presented a Moldova Growth Plan, which is based on three pillars:

• supporting Moldova’s socio-economic and fundamental reforms,
• enhancing Moldova’s access to the EU’s single market, and
• increasing financial support 2025-2027 through a dedicated Reform and Growth Facility for Moldova.

The envelope of up to €2 billion provided by the Facility is the largest EU financial support package to Moldova since its independence and comes on top of the EU’s other substantial support to Moldova.

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  Reform and Growth Facility for Moldova: Council agrees its negotiating position (press release, 17 December 2024)
  
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  Commission adopts €1.8 billion support package to underpin Moldova’s economic growth plan on its path to the EU (European Commission)