Moldova Faces Record Budget Deficit as EU Support Declines, Expert Says

Due to cuts in EU aid, the Moldovan authorities are facing a record budget deficit

The reduction in financial assistance from the European Union has led to a record budget deficit and forced the Moldovan government to resort increasingly to domestic borrowing. This was stated by Vyacheslav Ionita, Doctor of Economics and an expert on economic policy at the Institute for Development and Social Initiatives (IDIS) Viitorul.

Ion Chicu

Add Logos Press as a preferred source on Google

“In 2026, government expenditure will exceed planned revenue by approximately 20 per cent – around 100 billion lei (approximately $5.6 billion) compared with 80 billion (around $4.4 billion). Foreign grants are falling significantly short of what is needed, funding from the IMF has become more difficult to secure, and the European Union has become more cautious about allocating funds. For the first time in Moldova’s history, 20 per cent of expenditure is not covered by the budget. Yet this figure used to stand at 4 per cent,” said Ionita.

As a result, the expert noted, the government is increasingly borrowing money from local banks – “more than 5 billion lei ($278 million) every month, mainly on short-term loans”.

Western partners and EU countries have informed the Moldovan authorities that the republic must generate its own revenue and meet its social needs. In particular, donor support for the winter compensation programme has been withdrawn.

An EU spokesperson (Ambassador Iwona Piorko) emphasises that European funding is directly linked to the continuation of reforms – for example, Moldova received 157 million euros only after fulfilling a number of conditions. At the same time, major infrastructure projects are continuing in a number of areas (for example, the modernisation of hospitals with €72.4 million in support from the EU and the EBRD), but, overall, general budgetary support has been reduced.

For his part, Moldova’s former Prime Minister Ion Chicu warned that the country could become insolvent if it continues to accumulate debt and increase spending at this rate. He pointed out that the IMF had demanded the government drastically reduce the budget deficit; consequently, as Prime Minister Vasile Tofan has already announced, next year’s budget will be one of severe austerity.

This story was translated with the assistance of artificial intelligence.The translation was also reviewed by the Logos Press editorial team.

How did this story make you feel?