Moldova’s country ceiling is “B+”, which corresponds to an average ESG (RS) relevance level of “5” on both the political stability and rights indicators, as well as on the rule of law, institutional and regulatory quality, and anti-corruption indicators. The score does not reflect significant constraints, nor, indeed, incentives for long-term lending to the country. The assessment means that capital controls or currency controls that could make it significantly more difficult for the private sector to convert the national currency into foreign currency will not be introduced. And nothing will prevent non-resident creditors from repaying their debts.
In its report on Moldova, Fitch points to several factors that supported Moldova’s rating at the previous level: macro-financial stability; moderate but growing level of public debt with a stable, nevertheless, repayment profile. But the strongest argument was the continued access to external financing and strong support from the EU and international partners. Also noted are “sufficient external liquidity (reserves), prudent macroeconomic policy, gradual return to economic growth and higher GDP per capita compared to other countries”.
These factors are offset by the “high exposure of the small Moldovan economy to geopolitical risks, including frozen conflict and potentially destabilizing foreign interference in domestic politics, as well as a large structurally significant current account deficit and a high net external debt burden.
“Moldova’s overall budget deficit will increase to 4.9% of GDP in 2025 (3.9% in 2024), mainly due to increased expenditures in the process of implementing the EU’s Reform and Growth program. We forecast that the implementation of the program will result in the public sector budget deficit remaining temporarily high, averaging 5.1% of GDP in 2026-2027.”
Regional instability has created additional geopolitical risks for the country, Fitch said in the report. But there are mitigating factors – alternative imports (of electricity) and increased domestic production (including from renewable energy sources) have helped Moldova avoid significant disruptions, with the exception of higher electricity prices.
According to experts, overcoming the inflationary pressure of the energy shock was also helped by the central bank’s far-sighted monetary policy of inflation targeting, maintaining exchange rate flexibility and manipulating the prime rate. After its reduction in August, due to the reduced risk of secondary effects, Fitch forecasts that annual inflation will reach the NBM’s target range (5% ± 1.5%) by the end of 2025. And annual average inflation will be 7.8% in 2025 before falling to 5.9% in 2026, above the projected median of 5% for a ‘B’ rating.
Nevertheless, the country’s currency will continue to come under pressure as import demand related to public investment projects and energy will not be matched by growth in services and agri-food exports, reducing the availability of external financing. “As the leu is only partially covered by low foreign direct investment (FDI) inflows (net FDI is projected to average 2.4% of GDP in 2026-2027), we expect net external debt, projected at 28% of GDP at end-2025, to continue to rise,” the agency believes.
The sustainability is balanced by sufficient external liquidity (foreign exchange reserves). “We expect Moldova’s international reserves (projected at $5.6bn at end-2025) to provide relatively stable coverage (at 5.2 months of current external payments in 2026-2027,) above the projected median ‘B’ value of 4.2 months.”
“Moderate but rising public debt (38.5% of GDP at end-2024) would rise to 45.5% by 2027, closer to the projected “B” median of 49.9%, reflecting wider fiscal deficits and some moderate weakening of the leu. About 62% of government debt is denominated in foreign currency, but these liabilities are mostly on concessional terms. The government has no external commercial debt. Interest costs are relatively low and will amount to 1.6% of GDP or 4.5% of government revenues (below the median of 12.9% for the ‘B’ category) in 2025.”
