Page 122 - SE Outlook Regions 2022

budget. The retirement age for men will return to 63 years (after it was
cut by the previous government to 62 years) while the retirement age
for women will be gradually brought up to 63 years by 2028. Proper
functioning of the pension system would require, however, a retirement
age of 67 years, according to independent experts.

The public debt is planned to reach MDL103.3bn and will not exceed
40.4% of GDP at the end of 2022.

On the expenditures side, the wide deficit planned for 2022 reflects the
higher social spending and higher investments in infrastructure.

Moldova’s government extended very limited social support during the
first stages of the COVID-19 crisis, not least because of its limited
resources. With a rather thin local public debt market and no activity on
the foreign market, Moldova’s government mainly relies on its own
revenues and loans from bilateral or multilateral financial institutions
such as the World Bank or IMF. The previous government contemplated
issuing Eurobonds, but the executive formed after the elections in
mid-2021 has not resumed these plans.

The wide deficit planned for 2022 reflects on the financing side hopes
for economic recovery (+4.5%) and, more importantly, expectations of
robust external financing. The financing already received in 2021 from
the IMF and European Union supports such expectations. At the same
time, the financing from the IMF and the EU come with a calendar of
reforms attached, which guarantees sustainable development.

In December, the IMF’s board endorsed the 40-month Extended Credit
Facility and Extended Fund Facility (ECF/EFF) arrangements with
$558mn loans attached. “The authorities’ ambitious reforms center on
addressing Moldova’s longstanding and widespread governance
weaknesses and institutional vulnerabilities. The proposed
measures—if appropriately sequenced and resolutely
implemented—are expected to yield large medium-term gains,
unlocking Moldova’s untapped economic potential and accelerating its

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