Moldova

Moldova declared its independence after the dissolution of the Soviet Union in 1991. Despite being one of the three Eastern Partnership countries which have signed the Association Agreement, including Deep and Comprehensive Free Trade Area (DCFTA) in 2014, its progress in EU integration has been blocked by unresolved territorial integrity issues and socio-economic parameters.

The country has been implementing reforms with support of international partners, such as the International Monetary Fund (IMF) and the World Bank. At the same time, the country is going through the process of administrative and fiscal decentralisation. A reform of the public administration took place in 2017 with the aim to improve service delivery to citizens. There are persistent challenges regarding governance, especially in the financial sector, and the efficiency of public spending.

Public Finance for Development in Moldova

SINCE: 2011

In 2009, Moldova was assigned a priority country status in Slovakia’s mid-term ODA strategy. The Slovak Ministry of Finance started its engagement in Moldova based on the Memorandum of Cooperation between the finance ministers at the beginning of 2011.

ACTIVITIES: The activities focus on strengthening public financial management. This is being achieved mainly through building capacities in budgetary and fiscal policy, and programme-based budgeting.

I. Budget Reform and Programme-Based Budgeting

Moldova set an objective to improve budgetary and fiscal policy to achieve efficiency, transparency and accountability in public financial resource usage. Improving of a local public finances system and ensuring the financial autonomy of local self-governments were, among other things, an integral part of national reform strategies and programs in the period from 2009 to 2013. Following these activities, the Ministry of Finance of Moldova adopted the concept of program-based budgeting, which is also grounded in law. Consequently, since 2014, public institutions are obliged to prepare a draft medium-term budgetary framework and report on budget expenditures, including results achieved by programmes a particular institution.

In the Public Finance for Development Programme framework, the Ministry of Finance of Moldova has received government-wide support with the performance-linked programme-based budgeting implementation. The programme provided Moldova with technical assistance in preparation and setting up of the programme-based budgeting.

Outcomes

  • A practical guide for local public authorities on PBB implementation.
  • Examples of good and bad practices in setting up goals, objectives and performance indicators in programme budgeting for central and local public authorities.
  • Setting out of Moldova’s sub-national fiscal rules with the aim to strengthen fiscal management, and promote fiscal discipline and sustainability in the decentralized Moldovan government.
  • Improvement of Moldova´s Ministry of Finance PBB monitoring and evaluation methodology.
  • Slovak experts helped design the comprehensive capacity development plan during the 2016-2020 period, listing necessary actions to introduce the PBB system nationwide.
  • Technical assistance supported the PBB expansion strategy of Moldova´s Ministry of Finance with various capacity development activities, including training system design (curricula, training materials), training of trainers at the central and local government level (with over 120 trained), and delivering high-level workshops for decision-makers (ministers, deputy ministers, parliamentary commission, state chancellery).
  • The PBB training programme was developed in 2012, and updated in 2016 based on the results of PBB capacity assessment and training-needs analysis.
  • A training package for monitoring and evaluation of programme budgets was developed in 2016 for central and local public authorities which covered performance monitoring and reporting, use of performance data, and introduction of the evaluation concept.
  • Trainings of trainers on monitoring and evaluation of programme budgets were organized.

II. Other Technical Assistance to PFM Reform in Moldova

Outcomes

  • Strengthening capacities of the Congress of Local Authorities of Moldova in public finance management through sharing experience with the Association of Towns and Communities of Slovakia (ZMOS).
  • Strengthening the capacity of the Ministry of Finance and line ministries in the revision of national budget spending area (project implemented in cooperation with the IMF): Practical trainings and analyst trainings of the Ministry of Finance and the Ministry of Education to introduce a spending review system were held as part of the project (2019). The results led to the elaboration of operational guidelines for spending reviews for the directorate in charge of managing the spending review process. A similar project has been running at the Ministry of Agriculture of the Republic of Moldova since 2020.