Moldova’s PM Vasile Tofan Announces Strict Spending Cuts

Prime Minister announces strict cost-saving measures

The government intends to adopt strict financial discipline measures and to reduce expenditure. The statement was made by Prime Minister Vasile Tofan, who emphasised that the current budget deficit and the high costs of servicing the national debt leave no other option.

Vasile Tofan

Add Logos Press as a preferred source on Google

“We must make savings in any case. I do, however, hold some very conservative views on fiscal matters, if I may put it that way. I believe we must live within our means. And when the budget deficit has already exceeded 5 per cent of GDP, I consider that we are living beyond our means. However difficult it may be for us, we must cut our spending a little, and in some areas even reduce it significantly,” the Prime Minister told Exclusiv TV.

Tofan noted that, despite the relatively low level of domestic debt, servicing it is costly due to rising inflation and the base rate.

“I understand that, in times of crisis, there is an economic theory — the Keynesian one — according to which, on the contrary, we must flood the economy with money. But we do not have that option. The debt stands at around 37 per cent of GDP, which is a relatively low level, but servicing it is currently very costly for us, as inflation has risen and, with it, the base rate set by the National Bank. Consequently, domestic debt is becoming more costly for us. That is why our priority is to convert part of our domestic debt in lei into foreign-currency debt, which is much cheaper to service, and thereby make savings,” said Tofan.

The authorities intend to reassess the efficiency of public institutions and eliminate overlapping responsibilities.

“Where do we need to make savings? First and foremost, we must reduce expenditure on functions that do not yield significant results. If, for example, we have four agencies performing the same function, perhaps we should merge them into a single one. That way, we’ll have one accountant, one lawyer and one human resources specialist, instead of four of each,” explained the Prime Minister.

The Prime Minister emphasised that, despite the inevitable resistance from the bureaucratic apparatus, the process of optimisation and stricter use of public funds will be seen through to the end.

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?