WNISEF

Although Moldova's 2006 economic performance is not as impressive as recent years due to shocks from Russian trade bans and gas price hikes, the country continues to make progress toward developing a viable free-market economy. The government has liberalized most prices and has phased out subsidies on most basic consumer goods. High levels of worker remittances and fast regional growth were the main drivers of economic growth. In accordance with a 2005 Action Plan with the European Union, Moldova has begun to harmonize its laws with those of the EU. The progress achieved to date, coupled with societal consensus on European integration present a unique chance for Moldova to ultimately fulfill its European aspirations.

Macroeconomic Performance

Real GDP grew by 43% between 2000-2005.
Absolute poverty declined from 71% in 1999 to 29% in 2006.
Industrial output is $1.69 billion, down 6.9% from 2005.
The average monthly salary rose by 29%.
Moldova ranked 81st among 157 countries in economic freedom as evaluated by the Heritage Foundation and Wall Street Journal.
Moldovan Government earned $12.8 million in 2006 from privatization.
Successful rescheduling of foreign debt through the Paris Club and conclusion of all bilateral agreements.

European Integration Remains a Focus

Moldova signed the Central European Free Trade Agreement (CEFTA), which replaces the patchwork of 32 bilateral and free trade agreements among the South Eastern European countries.
Moldova became eligible for Millennium Challenge Corporation (MCC) program.
MCC approved a $24.7 million agreement for assistance with anti-corruption strategy under MCC's Threshold Program. European Union and the World Bank provided $1.2 billion for implementation of the EU-Moldova European Action Plan and the Moldova Economic Growth and Poverty Reduction Strategy Program.
IMF approved $167 million for realization of the three-year Poverty Reduction and Growth Facility.

Investment Climate

Since independence, $1.2 billion in FDI has been invested in Moldova.
Banking, energy, transportation, retail, communications are among industry sectors attracting the highest foreign investments.
Societe Generale de France Group became owner of 70.57% stake in commercial bank Mobiasbanka by paying $24 million. It is the largest transaction in the history of the Moldovan Stock Exchange.

Indicators	2001	2002	2003	2004	2005	2006
Real GDP Growth, %	6.1	7.2	6.3	7.3	7.1	7.5
Average Inflation, %	9.6	5.2	15.7	12.5	10.0	14.1
Exchange Rate, USD	13.0	13.6	13.9	12.3	12.9	12.8
Current Account Balance, % of GDP	-4.6	-3.1	-7.3	-5.5	-7.5	-5.4
Foreign Debt Stock (USD billions)	0.99	1.231	1.441	1.39	1.4	1.6
FDI (USD billions, net)	147	117	48	88	260	200

Sources: The World Bank, Economist Intelligence Unit (EIU)

Country Perspective, Moldova 2005