Press release number: IFAD 14/04

4 March 2004, Rome – Business leaders and entrepreneurs of about 60 villages in rural Moldova will act as catalysts in transforming the economies of their communities through a project aimed at changing the face of the country’s rural areas.

The USD 18.2 million project will be financed largely by a USD 14.9 million loan from the International Fund for Agricultural Development (IFAD) to the Republic of Moldova. The loan agreement was signed today at IFAD headquarters by the IFAD Vice-President, Mr Cyril Enweze, and the First Deputy Minister of Finance of the Republic of Moldova, Ms Mariana Durlesteanu.

“IFAD fully supports the Government of the Republic of Moldova in its efforts to reduce poverty through agricultural and rural development, particularly by empowering local communities to lead their own development.” says Mr Enweze.

Since Moldova’s independence in 1991, the country has suffered from the collapse of the centralized economy and the ongoing transition to a market economy. Like other countries in the region, Moldova has experienced a sharp decline in agricultural production and economic performance, and social safety nets such as the pension system have broken down. About half the country’s population today lives in extreme poverty and Moldova’s rural areas are hardest hit.

This project was developed based on lessons learned from similar initiatives in the region, which show that financial institutions, market outlets and village infrastructure need to be rebuilt or strengthened.

Financial services that benefit communities, rather than individuals only, will be a focus of the project. Unlike in traditional financial services programmes, which evaluate loan applications solely on the basis of financial viability, loan applicants will also have to prove that the proposed investments will benefit their community as a whole. This will help ensure that villages are able to develop and support a common investment strategy. This should make the project more effective and the results more sustainable.

The project is expected to lead to the conversion of up to 10,000 hectares of low value crops to intensive cultivation of high-value crops. It will also better link farmers to service providers, agro-processors and marketing agents.

With this project, IFAD will have financed 2 projects in Moldova, with a total cost of USD 37.7 million.

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IFAD is a specialized agency of the United Nations dedicated to eradicating rural poverty in developing countries. Since 1978, IFAD has financed 653 projects in 115 countries and territories for a total commitment of USD 8.1 billion. Through these projects, about 250 million rural people have been supported in their efforts to overcome poverty.