Republic of Moldova
US$ 251.72 million
Total Project Cost
US$ 130 million
Total IFAD financing
The Republic of Moldova is a small landlocked country bordered by Ukraine and Romania, with a population of approximately 3.5 million people in 2019, and a gross domestic product per capita of US$3,227 in 2018. Since the early 2000s, economic growth has averaged 4.6 per cent annually. The economy grew by 3.6 per cent in 2019, driven by investment, private consumption, higher wages, and social benefits. Remittances are crucial in developing the economy and account for 16 per cent of Gross Domestic Product (GDP) in 2019.
Economic growth, remittances and social assistance have significantly reduced poverty levels in the country. The absolute national poverty rate fell from its peak of 73 per cent in 1999 to nine per cent in 2019, and the extreme poverty rate declined from 59.7 per cent to 0.2 per cent in the same period.
This was attained as a result of the country’s economic growth, increased remittances and the social assistance programmes, ran by the government, targeting extreme poor and poor households. Moreover, concrete measures taken in the area of agriculture modernization and small and medium enterprise development, had created job opportunities for rural labour. Large gaps remain, however, with 80 per cent of the poor coming from rural areas in 2016.
Migration has indirect adverse effect on the economy and social fabric of Moldova, with rural areas being particularly hard hit as two-thirds of all immigrants are in these areas, majority of them in the most productive age. Recent analysis and surveys tend to show that migration patterns evolve towards a diversification of destinations (EU notably) and duration, with higher increase in seasonal migrations.
Moldova’s large-scale out-migration, combined with decreasing fertility rates, has led to a drastic decline in the population and increased the share of elderly people. As a consequence, there is a tangible need to create employment opportunities and develop rural economy if it is to stem the outflow of migrants and counter the adverse effects of reduced remittances flows.
In Moldova, IFAD projects support the development of links between agricultural producers, markets and suppliers. IFAD tries to improve the access of rural population to well needed financial services, develop market intermediaries, and enhance the availability of advice to financial institutions and businesses.
Accordingly, IFAD is promoting more resilient livelihoods in marginal rural areas by supporting climate-smart agriculture, economic diversification, talent retention and access to rural finance.
IFAD’s overall goal is to assist the productive poor in taking advantage of the opportunities emerging from the ongoing rural transformation in the country.
IFAD Country Strategic Opportunities Programme (COSOP 2019-2024) has two strategic objectives:
- improve the adaptive capacity of smallholders and agribusinesses through market-driven investments. This is done by enhancing farmer’s resilience through investments in productive rural infrastructure and agri-systems.
- promote inclusive market linkages through enhanced access to financial services and markets in order to foster rural transformation.
IFAD sees strong potential to revitalize crop production and processing for both domestic and export markets. IFAD has systematically invested in agricultural processing and infrastructure rehabilitation in Moldova with focus on climate resilient infrastructure.
While contributing to the UN Coordination Team’s efforts to support the Government of Moldova and its National Development Strategy “Moldova 2030”, IFAD’s investments are aligned with the UN’s Sustainable Development Goals and more specifically, contribute to the achievement of: (SDG 1) no poverty, (SDG 2) zero hunger, (SDG 5) gender equality, (SDG 6) clean water and sanitation and (SDG 13) climate action..
Amongst its operations in the country, an important partnership has been developed with the National Commission for Financial Market (NCFM), with the aim to develop a regulatory framework for partnering financial institutions and to assist Saving and Credit Associations in becoming more efficient and credible as a financial service provider.
In addition, South-South and Triangular Cooperation (SSTC) is an important pillar of join efforts to support Moldova. IFAD is at the origin of several SSTC initiatives including a regional grant (in Armenia, Georgia and Moldova), promoting knowledge and experience sharing in the area of the establishment of agricultural cooperatives. Another ongoing regional grant (implemented in Moldova, Morocco and Sudan), in partnership with ICARDA, intends to strengthen Monitoring and Evaluation as well as Knowledge Management skills among selected national institutions within the three countries.
- Agriculture and food processing industry sectors are among the main growth drivers of Moldovan economy. It constitutes around 18 per cent of GDP and 50 per cent of total exports originate in agriculture and food products.
- Remittances accounted for 16 per cent of Gross Domestic Product in 2019.
- Agriculture production and processing, farmers’ income and access to inputs are the most critical areas to support especially in the aftermath of the COVID-19 outbreak.
Projects and Programmes
IFAD-supported project to boost resilience and rural economic opportunities in Moldova
A boost for climate change resilience in Moldova
No place like home: Moldovan youth bring business to the countryside
Moldova’s agriculture sector is increasingly developing and modernizing. This is due both to an increased presence in lucrative markets like the European Union and to the efforts deployed by IFAD and the Government of Moldova to help restructure the sector, largely through sustained investments and financial support to small-scale farmers, to accompany this modernization.
Case study: Shifting to conservation agriculture to build resilience to climate change
Financing for young farmers in the Republic of Moldova
Investing in rural people in Moldova
IFAD Results Series Issue 3
Refinancing facilities: IFAD introduces an innovation in rural finance development
IFAD uses highly concessional loans in an innovative way in the Republic of Macedonia, the Republic of Armenia and the Republic of Moldova. Low-cost refinancing capital makes rural investments attractive and profitable for formal financial institutions and reduces rural poverty by stimulating economic growth.
In the past seven years, IFAD has successfully used refinancing facilities in economies in transition to stimulate investments on farms and in rural processing companies. The facilities have refinanced projects for a total value of over US$50 million in the Republic of Moldova, the Republic of Macedonia and the Republic of Armenia, with an excellent recovery performance. Refinancing operations have proved to be a viable alternative to established modes of financing rural investments through lines of credit and microfinance. And they have encouraged financial institutions to expand their rural networks and start investing in agro-projects from their own funds.