Moldova & IMF IMF Activities Publications Press Releases

Republic of Moldova
Interim Poverty Reduction Strategy Paper

I. Introduction 

1. Over the last three years Moldova has made significant progress toward achieving

and retaining macroeconomic and financial stabilization. It has, furthermore,

implemented many structural and institutional reforms that are required for an efficient

functioning of a market economy. The results of these efforts have contributed to the

maintenance of macroeconomic and financial stability under difficult external

circumstances and the creation of an environment that is conducive to the economy™s

growth and development in the medium term.

2. Despite these efforts Moldova continues to have one of the lowest levels of income

per capita in Europe. The Government is well aware of this reality and is of the view that

rapid and sustainable growth is the main instrument for reducing the development gap of

the country relative to the rest of Europe, improving the standard of living of the

population and reducing the poverty of those most in need. To address these aims in a

comprehensive fashion the Government is intending to prepare a Poverty Reduction

Strategy Paper (PRSP) by early 2002 and launch a national poverty reduction plan. This

policy is consistent with Moldova™s aspirations to become more integrated in Europe. To

strengthen the policy™s effectiveness, the strategy will be prepared by the Government in

close consultation with, and broad participation from, representatives of the Parliament,

civil society, and the donor community.

3. With the aim of achieving a rapid and sustainable growth path, the Government has

agreed with the Fund and the Bank staff on a three year macroeconomic framework and a

set of policy measures, which are described in the attachments to this document. The

Government intends to request a three-year Poverty Reduction and Growth Facility

(PRGF) arrangement with the Fund. Furthermore the Government will continue to

cooperate with the World Bank in the context of structural adjustment and investment


II. Characteristics of Poverty in Moldova

4. Existing studies on Poverty in Moldova include an ethnographic survey of poor

households conducted in late 1996, the World Bank™s Poverty Assessment and

Moldova™s Household Budget Surveys which are compiled on a quarterly basis from the

second quarter of 1997 onwards. The evidence generated by these studies suggests that

poverty in Moldova is high and mainly due to limited job opportunities and low incomes,

especially in rural areas and in the agricultural sector.

5. International comparisons reveal that Moldova ranks low in comparison with other

transition economies in terms of commonly used living standard and human development.2

indicators. Per capita GDP in Moldova is lower than the average for Former Soviet

Union economies, and significantly lower than the average for Central European and

Southern European transition countries. The UNDP™s human development index for

1999 (based on 1997 data) ranks Moldova 104 th out of the 174 countries ranked. This

ranking is lower than all the transition countries in Central Europe (33-47), Southeastern

Europe (55-73) and all the Former Soviet Union economies, with the exception of

Tajikistan that follows closely behind. Furthermore, the effects of the regional crisis in

1998 and the drought experienced in the country in 2000 are likely to have had a

continued adverse effect on the country™s living standards and human development


6. The existing studies indicate that a significant, and growing, share of Moldova™s

population is poor. In particular, about 35 percent of Moldovans were below an absolute

poverty line of MDL 82.1 per person in May 1997. Preliminary estimates suggest that

the proportion increased significantly to over 53 percent by last quarter of 1999 (see

Table 1).

Table 1 Poverty Using Absolute Poverty Line

1997 Q3 1997 Q4 1998 Q3 1998 Q4 1999 Q3 1999 Q4

P0 30.4 37 41.3 46.1 55.6 53.4

P1 9.7 13.2 15.4 15.8 21.9 19.5

P2 4.7 6.6 7.8 7.5 11.3 9.5

Note: P0 is the ihheadcountl. for poverty Πthe percentage of households with consumption below the

poverty line; P1 is a measure of the ihpoverty gaplv or depth of poverty, and P2 is the severity of poverty.

7. The increase in poverty has been associated with an increase in inequality. The Gini

coefficient for income inequality increased from a value of 24 for 1987-1988 to 34.4 in

1992 and 36 in 1993. The 1999 household budget survey finds the Gini coefficient for

consumption to be around 41, with the richest 20 percent of the population accounting for

almost half of total consumption in the economy.

8. The existing studies provide firm evidence that the 1998 regional crisis has had an

adverse effect on both poverty and inequality. The results of the 1999 household budget

survey indicate that the gross income of close to 80 percent of households was less than

the subsistence minimum of MDL 233 per person per month, calculated according to

international norms. Work undertaken for the formulation of the government™s National

Poverty Reduction Strategy suggests that over 20 percent of the population may be

classified as extremely poor, more than two-thirds of which reside in rural areas. As a

result of the drought, the situation is likely to have deteriorated further in 2000.

9. The poor in Moldova range from less educated, unskilled workers, or very large

single-parent families, to highly educated persons who once enjoyed socially prestigious

and well compensated positions as scientists and professionals. Among the poorest

groups are the working poor, especially the landless workers in the agricultural sector,

families with children, families numbering more than 5 members, families with one or

more vulnerable members, and the unemployed, a third of which are in extreme poverty.

10. Poverty in Moldova is more prevalent in rural areas. In 1997 the statistics showed

that about 21.1 percent of the population in rural areas were found to be below the.3

relative poverty line, compared to 17.2 percent of the population of other cities, and 6.7

percent of the population in Chisinau. The most vulnerable are the agricultural workers:

27 percent of agricultural workers were below the relative poverty line, as compared to

15 percent of farmers, and 21 percent of unemployed.

11. Despite their capacity to produce some of their own food Πwhich has kept many

rural poor out of extreme poverty Πconditions in rural areas remain difficult. Many rural

households survive on subsistence farming. Agricultural households interested in

farming lack the means to expand into more profitable farm activities. Cash-poor, with

fewer opportunities to obtain credit, these households are unable to branch into more

profitable crops because they cannot afford equipment, fertilizers, pesticides, seeds or

irrigation. Although the country has made good progress in farm restructuring and land

privatization, the reforms were delayed until the collective farms had largely collapsed

along with the processing/marketing system that supported the agricultural sector. A

promising development has been the land consolidation that is underway following the

privatization of land. It has, nevertheless, failed to produce an increase in agricultural

output to date.

12. The poverty increase in Moldova over the transition period is the combined result of

a number of developments, both external and domestic. These include: (a) the effect of

the dissolution of the Soviet Union, the accompanied disruption of trade and payments

and, especially, the price shock which accompanied the liberalization of the price of

energy, a key (and imported) component of Moldova™s domestic costs. A comparative

study undertaken by the World Bank suggests that Moldova was the hardest hit country

of the Former Soviet Union by the terms-of-trade effect which accompanied the

movement of domestic energy prices towards international prices; (b) the conflict with

Transnistria in 1992 and a series of natural disasters and their effect on the country™s

agricultural sector and agro-processing, which account for around half of the country™s

GDP. These include floods in 1992 and 1994 and the 2000 drought; (c) the continuing

regional instability and, especially, the effects of the Russian crisis of 1998. The above

exogenous factors were exacerbated by intermittent policy reversals in the

implementation of the country™s structural reform program.

13. The Government intends to design a comprehensive and participatory program aimed

at ensuring the economy™s sustainable growth and development in the medium term and

explicitly tackling the issue of poverty in the country. A sustained effort has and will

continue to be made to update the available poverty database in order to enhance the

impact of the program™s poverty alleviation measures. A collaborative program

supported by the UNDP was signed in August 2000 aiming at developing further the

informational instruments and policymaking in the social sector and improving the

institutional structure for assessing and monitoring the poverty alleviation impact of

policies. Work is currently underway in order to identify knowledge gaps, and specify

the analytical work necessary for the preparation of the full PRSP.

III. Three Pillars of a Poverty Reduction Strategy

14. The government™s poverty reduction strategy will be founded on three pillars: (i)

sustainable and inclusive economic growth that will provide the population with.4

productive employment; (ii) human development policies emphasizing increased access

to basic services (especially primary medical services and primary education); and (iii)

social protection policies targeting those most in need.

15. The government™s poverty reduction strategy will focus on a fair distribution of the

benefits of growth for the entire population and will take into account the existing social

capital at the community level. The PRSP approach provides Moldova with the

opportunity to clearly address poverty reduction as an explicit policy goal and formulate

the strategy in a participatory fashion thereby increasing ownership.

A. Sustainable and Inclusive Economic Growth

16. The Government will maintain a stable macroeconomic environment tailored to the

country™s financing constraints and conducive to the economy™s growth and development

in the medium term. The program aims at consolidating the stabilization achieved in the

first ten months of the year and providing the conditions for the economy™s sustained

growth and development in the medium term. The Government has, in consultation with

the IMF, elaborated a macroeconomic framework for the next three years. The program

projects that Moldova™s economy will expand at a growth rate of around 5 percent a year

over the medium term. Its main elements appear in Appendix A of this document.

17. The promotion of sustainable growth and inclusive development is the overarching

priority in the government™s development and poverty reduction strategy. And

sustainable growth in the medium term is likely to stem from the development of private

sector activities in areas where the country has a comparative advantage. These areas are

likely to include the agro-industrial sector, the small and medium enterprise sector and

the service sector, i.e. areas that either reflect the country™s endowments or were

underdeveloped under the command economy. A detailed study will be conducted to

identify the sources of economic growth in Moldova.

18. The Government is of the view that sustainable and rapid economic growth will be

achieved through a model of development based on private sector growth and the

development of export industries in areas where Moldova has a comparative advantage.

The development of the private sector is essential for the creation of a market economy

and for reaping the benefits associated with a well functioning market system. The

Government plans to develop an export led-growth strategy with an aim to diversify

export products based on its comparative advantage and gain access to non-traditional

export markets.

19. The Government remains committed to further progress in its structural reform

program that will promote the creation of a stable and predictable framework to facilitate

private sector activities, attract foreign direct investment, as well as increase domestic

investment. Toward this end, the Government intends to adopt structural measures

including financial sector reform to increase access to cheaper credit necessary for the

development of private enterprises, privatization of key strategic industries, enterprise

restructuring, improved business environment, deregulation of the private sector,

rationalization of licensing and registration, improved corporate governance, and.5

improved institutional and legislative environment conducive to foreign and domestic


20. With regard to the government™s privatization program, emphasis will be placed on

the open and transparent privatization of the energy sector (three electricity distribution

companies were already sold to a strategic investor and tenders were already launched for

the remaining two distribution companies and the three power generating companies), the

telecommunication sector (with the privatization of ifMoldtelecomli), and the wine sector.

The land privatization program is close to completion.

21. With regard to enterprise restructuring, the bankruptcy and liquidation of enterprises

with significant debts will continue throughout the period. Bankruptcy and liquidation

procedures have already been initiated against firms with significant arrears to the state

and Social Fund budgets. The legislative framework for efficient corporate governance

will be improved further. The Government will identify specific measures in this area

with donor assistance.

22. Finally, a sustained effort will be made to create a better investment climate by

eliminating barriers to entry for new enterprises. This includes the simplification of entry

procedures (through the simplification of licensing and registration requirements) and the

improvements in the legal framework required for the further growth and development of

private sector activities in Moldova.

23. Poverty reduction through sustainable and inclusive growth requires not only a

dynamic private sector but also an efficient public sector that can operate in a transparent

and accountable fashion and are accessible to the entire population. The Government has

recently adopted a comprehensive Public Sector Reform Strategy that aims to build

market-oriented and service/client oriented, merit-based, de-politicized and corruption-

resistant public sector, which meets EU "best practice" standards; is affordable and

fiscally sustainable; and ensures cost-effective delivery of priority public goods and

services and interacts with and supports the development of the private sector.

24. The government™s public sector reform program supported by the World Bank under

the planned series of Public Sector Reform Credits will include:

the rationalization and more efficient targeting of social sector expenditures

(including health, education and social assistance expenditures);

the promotion of a comprehensive public administration and civil service reform

aiming at: modernizing and re-orienting the role of the state from directing and

controlling economic activity towards transparently facilitating the growth and

development of the private sector, restoring public and business confidence in state

institutions, and decentralizing authority to a reorganized and strengthened system of

local administration;

the strengthening of the legal and judiciary systems;

the tackling of corrupt practices in the areas of state capture (which restricts

competition and domestic and foreign direct investment in the economy) and

administration (the burden of which is borne disproportionately by the poor)..6

the improvement in the management of public expenditures (including the reform of

the budget process and budget execution, as well as the cash and debt management),

the further strengthening of the system of intergovernmental finance, and the further

improvement of the government™s revenue performance and strategy:

25. As noted already, poverty in Moldova is especially prevalent in rural areas. In

parallel to the above measures, the Government will give high priority to agricultural and

rural development to address the existing constraints in the development of the rural areas

and generate employment and income on a sustainable basis. The Government will

develop and adopt a comprehensive agricultural and rural development strategy to set

aims and priorities and determine the content and sequencing of policy interventions.

The overall objective of the strategy is the increase in rural incomes and living standards

by promoting rural entrepreneurship, agricultural production, economic diversification,

and trade in rural areas.

26. The above reforms as well as those measures geared more specifically towards

poverty reduction are summarized in the attached policy matrix (Appendix B). The

outlined policy commitments and targets for the outer years are tentative. They will thus

need to be revised when the interim PRSP is replaced by the full PRSP.

B. Human Development

27. The Government is of the view that economic growth that does not translate into

improvements in the standard of living for everyone is socially, economically and

environmentally unsustainable. The promotion of sustainable human development in the

Republic of Moldova would mean strengthening social cohesion through a precise

identification of the sources and consequences of social exclusion and the elaboration of

necessary policies to address these in order to meet the basic needs of the most vulnerable

layers of the population.

28. The Government will promote human development through the design and

implementation of comprehensive and integrated strategies aiming at sustainable

improvements in health and education. The strong correlation between poverty and

related human development indices provide firm support for the poverty alleviation

impact of human development programs; improvements in health and education have a

direct effect on poverty reduction. They, furthermore, entail significant positive

externalities for the improvement in the economy™s supply side and the promotion of

sustainable and inclusive economic growth within a socially cohesive society. Moldova

has few natural resources and its human capital could become the main source of

economic growth.


29. Over the transition period the health situation in the country has deteriorated

significantly with a steep decline in health expenditures (which accounted for only 2.9

percent of GDP in 1999 down from 6 percent in 1997), a decline in life expectancy, and

an increase in the number of people suffering from diseases.

30. The government™s health care strategy aims at:.7

Maintaining the level of health expenditures in real terms at least at the level of the

2000 budget;

Instituting poverty reduction interventions, such as emphasizing primary health care

and disease prevention;

Improving the allocation of resources to make it more equitable and efficient,

including the restructuring of the provider network;

Developing health services autonomy, especially for hospitals; and

Training general practitioners and health managers.

31. In the short run the health reform aims at:

Guaranteeing transparent access to a minimum package of health services which are

affordable to the state and for which the state™s commitments are fully funded;

Modernizing emergency services and primary health care;

Strengthening the health sector™s institutional capacity while reducing excess

capacity; and

Supporting the development of TB and HIV/AIDS Strategies.


32. Mirroring developments in health, education over the transition period has

deteriorated significantly with a steep decline in enrollment rates, chronic absenteeism

among poor children, lower participation of poor students in upper secondary and tertiary

education, and reduction in education expenditures (which accounted for around 4.7

percent of GDP in 1999 down from 10 percent in 1997). Given the importance of

education in providing its recipients with the means for a sustained reduction in poverty

and the positive externalities of human capital development for the country at large, the

Government remains committed to a sustained effort to improve the country™s

educational sector.

33. In particular the government™s education policy aims to improve the efficiency of the

educational system while maintaining fiscal sustainability. The Government, with

assistance from the World Bank, is preparing an Education Sector Strategy that will make

specific recommendations for achieving these objectives. The government™s strategy will

include the following components:

Promotion of access to, and retention in, basic and secondary education for poor


Improvements in the governance and accountability of the education system.

Undertaking an analysis of the decline in gross enrollment rates in basic education

over the transition period..8

Review the structure of the secondary education system in order to make it more

appropriate to current demands in the labor market and identify measures for

improving the quality of secondary schooling.

Review curriculum standards and address issues related to the quality and

remuneration of teaching staff for the entire education system.

Develop analytic data bases including: an education management information system

that includes a school mapping data base, financing data, and human resources data; a

study of informal payments by families at all levels of education; and a study of

alternative ways to save energy in schools.

C. Social Protection

34. The Government recognizes that the reform of the country™s social protection system

is necessary in order to provide fiscally sustainable and well-targeted assistance to those

in need. In the past Moldova™s social protection system relied on pensions supplemented

by poorly targeted and, to a large extent, under-financed benefits and privileges. Work

undertaken by the Government in the process of formulating its national program for

poverty alleviation suggests that over one-third of Moldova™s population enjoyed

privileges which were both poorly targeted and expensive, accounting for around 8

percent of Moldova™s GDP in 1998.

35. Recent developments in social protection in Moldova have included the

rationalization of energy and, partially, transport subsidies by eliminating the old system

and approving a fully funded and targeted compensation scheme based on category

targeting which is paid in cash and directly to recipients. The Law on the special social

protection of certain categories of population, that eliminated non-targeted energy

subsidies and limited energy privileges to the nine categories representing the most

vulnerable segments of society, is likely to have a beneficial effect on government

finances and improve significantly the efficiency and targeting of the government™s social

assistance program.

36. Designing a social assistance system that is transparent, fully funded, fiscally

sustainable, and well targeted will be the focus of the next phase of the social protection

policy development. The modification and establishment of various policy parameters

(e.g. minimum wage and subsistence minimum) needs to be based on financial and

economic analysis of their link and impact on social benefit programs. Under the

constraint of lacking a reliable income certification process, future social assistance

system would need to rely on a combination of targeting mechanisms and will consist of

a mixture of programs at national levels and local levels.

37. It is conceivable that programs targeted to families with children, particularly those

with many children, would need to be at the center of the national social assistance

program, given that poverty analysis suggests that these families tend to be among the

most poor. Analyzing options to rationalize existing child benefits would be the first step

in this direction. Options of direct in-kind assistance to children of school age could be

considered as a measure to supplement cash transfers while at the same time encouraging.9

school attendance. The Government is currently working with development partners

(UNICEF, European Trust, and SIDA) to pilot de-institutionalization programs. The

World Bank has also been supporting this effort through the Social Investment Fund


38. With regard to the reform of the pension system the Government remains committed

to strengthening the linkage between contributions and benefits, eliminating privileged

pensions and tightening eligibility criteria, making the system more transparent (with a

clearly specified benefit formula and indexation rule and establishing an individual

pension record for everybody).

39. As a second element of the social protection program, work on improving the

functioning of labor markets and the protection of those in poverty while unemployed,

together with improved access to job search and job creation services will be undertaken.

Finally it is envisaged that locally administered programs will be an important element in

the social assistance system. Nevertheless, a thorough analysis of the available options

and monitoring mechanisms is necessary in order to ensure that the programs would be

sustainable and can assist the poor in an efficient and equitable manner.

40. The employment policy and labor market development is an important area of the

government™s poverty program. To facilitate the development of a flexible labor market

which would lead to a more efficient use of the labor force, the government™s strategy

will include: (a) a comprehensive analysis of the labor market developments and the

impact of structural reforms on the employment, job creation and wage adjustment; (b)

the identification and removal of the legal constraints on the functioning of a flexible

labor market; (c) the evaluation of the efficiency of the existing labor market programs

such as job searching and retraining and work out a new design. The Government has

identified technical assistance needed in the following areas: (a) labor market monitoring,

(b) legislative review and development, and (c) employment assistance program design.

41. The Government will place particular emphasis on alleviating child poverty. The

available studies suggest that households with children are the most vulnerable group in

Moldova. Furthermore there is firm evidence of an increase in child malnutrition.

42. The government™s national poverty reduction program aims at addressing the issue of

child poverty through focused and well-targeted interventions within the limits imposed

by the country™s financial situation. These include interventions aiming at ensuring

adequate levels of food security and childcare, and the social protection of orphans and

disabled children. To achieve these objectives, the Government will need technical

assistance to conduct analytical work that is required to assist in the redesign of the child

assistance program..10

IV. Institutional Mechanisms for the PRSP

A. Institutional Arrangements

43. The Government has established a PRSP Steering Committee to oversee the

development of the poverty reduction strategy. The First Vice-Prime Minister and

Minister of Economy and Reforms will act as the coordinator for the preparation of the

PRSP. An inter-ministerial PRSP Working Group, reporting to the First Vice-Prime

Minister and Minister of Economy and Reforms and the Steering Committee, has been

set up and will be responsible for the day-to-day management of the PRSP exercise and

for the preparation of the draft PRSP. In the sectors in which government policies and

programs can have a significant impact on poverty reduction, Sector Working Groups

(SWGs) have been or will be established and will be responsible both for the

development of policies and strategies for inclusive development and for defining priority

programs and measures within the sector public expenditure program.

B. Measures to Strengthen Public Expenditure Management

44. The efficient implementation of the government's poverty reduction strategy requires

that weaknesses in the planning and management of public expenditure be addressed.

Under the government's Public Sector Reform Program, the Government aims to build a

robust, sustainable and effective public sector resource management system which

provides for high levels of fiscal control (hard budget constraints at all levels of

government); strategic prioritization (allocative efficiency in budget formulation and

expenditure review and prioritization at all levels of government); and technical

efficiency in budget execution (at all levels of government). Specific measures are

already being developed and implemented to: (i) introduce a strategic approach to the

prioritization of public expenditure under which expenditure decisions are explicitly

linked to government policies; (ii) adopt a three year time horizon for the programming

of public expenditure, thus placing the design of expenditure policy in a medium-term

framework; (iii) refocus of budget management towards placing emphasis on the

realization of outputs and outcomes rather than the utilization of inputs and perceived

needs. In addition measures have and will continue to be taken throughout the period in

order to improve the monitoring of public expenditures and ensure that resources reach

the intended beneficiaries.

45. The Government recognizes that effective implementation of the expenditure policy

will require significant increases in capacity at the center of Government; in the Ministry

of Finance; and in line Ministries. These capacity-building measures will be addressed

under the government's Public Sector Reform Program, to be supported by World Bank™s

Public Sector Reform Credits. With the assistance of Moldova™s development partners

the Government has begun to address these requirements through the introduction of a

medium-term expenditure framework (MTEF) and other initiatives to strengthen budget

implementation procedures. The MTEF process will ensure that sector policies and

public expenditures have a clear poverty reduction focus and are designed taking into

consideration the country™s available financial resources..11

46. The Government will continue its efforts aimed at improving budget implementation.

Past work undertaken with the support of international organizations included a revision

of the budget classification system to strengthen the targeting and monitoring of public

expenditure, establishing a central treasury system, and implementing the law on local

public finance which is related to law on administrative and territorial reforms. Further

work will be undertaken aiming at improving Treasury operations to ensure the more

timely release and predictability of funds and better timely reporting of expenditure and

increasing responsibility and accountability of local governments for service delivery that

could be more effectively carried out by the local governments, complying with

minimum standards of public financial management to ensure that public resources are

being used to achieve the government™s poverty reduction goals, and promoting broad

participation of the public by publishing information on the MTEF, the budget and


47. To successfully implement the law on Local Public Finance, the Government is well

aware of the need to strengthen the capacity of local governments over the medium and

long-term. Currently, the Government is working with development partners to improve

and streamline the budget execution at the local government levels. Plans are being

developed to build the capacity of local governments and to streamline the system of

inter-government fiscal relations including a thorough reviewing of the existing

legislation on the budget system, territorial administration, local public finance; adjusting

the assignment of expenditures; and finalizing the regulation of transfer of property rights

to sub-national governments.

48. The preparation of the PRSP will be closely linked with the MTEF process in

ensuring consistency between the government's poverty reduction strategy, its

expenditure plans and the country™s available financial resources.

V. Participatory Process and Timetable for the PRSP

49. The interim PRSP was prepared by the Ministry of Economy and Reforms following

consultations with line ministries, other government entities and Parliament. Comments

were also sought from representatives of international organizations and the donor

community, including the IMF, the World Bank, and EC/Tacis.

50. The preparation of the interim PRSP was launched in July 2000 with the setting up of

an inter-ministerial working group as well as sectoral working groups in line ministries

that focused on the poverty reduction strategy. With assistance from Moldova™s

international partners meetings were conducted to alert government officials, civil

society, and donors about the new initiative and, in particular, the participatory aspect of

the PRSP exercise.

51. The Government is committed to the participatory approach for the formulation,

implementation and monitoring of the PRSP, which is outlined in Appendix D. Based on

an analysis of the current level of participation in Moldova, a complete stakeholder

analysis will be carried out. In preparation for this analysis the Government is in the.12

process of compiling a list of organizations identified as important in areas relevant to the

PRSP process. Following this analysis, the Government will commit to clear and

transparent selection criteria for the participation in the consultation process, to ensure

broad representation of domestic and international stakeholders in the PRSP exercise.

52. The Government is committed to provide information on the PRSP process and

consult widely with its domestic and international development partners. The

Government will continue to disseminate widely background information for the PRSP

process to relevant stakeholders through a sustained public awareness exercise and the

posting of relevant information in the government™s web site. Institutional mechanisms

for the consultations with stakeholders will include interviews, focus groups, workshops,

and conferences. The participatory process for the PRSP will culminate in a stakeholder

workshop with the aim to validate and finalize the Poverty Reduction Strategy in October

2001. By the end of 2001, the Government will produce the full-PRSP incorporating the

contributions of all stakeholders. The work plan for the preparation of the PRSP is

outlined in Appendix D.

VI. Monitoring Indicators

53. The Government has and will continue to undertake a series of measures in order to

improve and/or establish appropriate mechanisms for the regular and timely collection,

analysis and publication of the database required for the monitoring of social indicators

relevant to the PRSP process. The Department of Statistics, in cooperation with

development partners that will be identified soon, will compile a poverty update based on

the 2000 Household Budget Survey. A qualitative participatory poverty assessment will

also be conducted by September 2001.

54. In addition to improving the database, the Government will, with the support of

Moldova™s development partners, undertake a sustained effort throughout the period to

improve the analytical and research capability necessary in order to understand the nature

and causes of poverty in the country. This will improve both the design as well as the

monitoring of the impact of its policy interventions. The results of all information

gathering activities and the relevant analytical work will be widely publicized and the

Government is committed to consult with relevant stakeholders on these results through

appropriate channels, including interviews, workshops and conferences.

55. At present, the Government intends to monitor the progress of its poverty reduction

strategy based on a set of indicators consisting of (i) male and female life expectancy, (ii)

death rate and natural increase in population, (iii) infant mortality rate, (iv) maternal

mortality rate, (v) under-five mortality rate, (vi) immunization rates, (vii) basic education

enrollment rate, and (viii) secondary education enrollment rate. A list of the relevant

indicators for Moldova appears in Appendix C. In addition, the results of the 2000

Household Budget Survey and other related work, most notably the program supported

by the UNDP aiming at developing further the informational instruments and

policymaking in the social sector and improving the institutional structure for assessing

and monitoring the poverty alleviation impact of policies, will be used to assess progress..1

Appendix A: A Three-year Macroeconomic Framework

I. Introduction

1. Rapid and sustainable growth is the main instrument for improving the standard of

living of the population and reducing the poverty of those most in need. The

government’s macroeconomic policies aim at consolidating the stabilization achieved

under difficult external circumstances over the first ten months of the current year and

providing the preconditions for the economy’s sustained growth and development in

the medium term.

II. Current Policies and Recent Developments

2. In the current year the absence of external financing required an urgent adjustment

in the government’s fiscal policy aiming at containing the budget deficit and

maintaining macroeconomic stability. Revenues were higher than budgeted due to

improvements in tax collection and higher profit transfers from the National Bank of

Moldova to the state budget. Furthermore, netting-out operations of the consolidated

budget remained well below the envisaged 5 percent ceiling. Most of the fiscal policy

adjustment has, however, come about through a reduction in government expenditures.

In particular government expenditures were reduced despite the increase in the wages

and salaries of public sector employees in the health and education sectors.

Furthermore, over the first six months of the current year the government reduced the

stock of pension arrears and wage arrears of public sector employees by 190 Million lei

and, for the first time, repaid a part of its debts to the National Bank of Moldova.

3. Monetary policy was tightened with the monetary base growing by 17.8 percent in

the first nine months of 2000 compared to 33.8 percent over the same period in 1999.

Over the first nine months of the current year, inflation decelerated to 15.5 percent

(with 12 months inflation falling to 29.2 percent relative to 43.8 percent at end-1999).

The exchange rate stabilized. National Bank purchases of foreign currency increased

gross international reserves to over USD 200 million, up from USD 180 millions at

end-1999. The minimum capital requirements of commercial banks were increased,

resulting in some consolidation in Moldova’s banking sector.

4. A recent adverse development has been the severe drought that occurred in early

summer. Given the primary importance of agriculture and the agro-processing sector

for the country’s economy, the drought is likely to have a significant adverse on

government finances and Moldova’s GDP evolution, which is likely to remain

unchanged in comparison with last year.

III. Future Policies

5. Turning into the future policies and projections the program envisages that

Moldova’s economy will expand by about 5 percent a year over the medium term.

Inflation is programmed to decelerate further, reaching the level of 10 percent by end-2001..2

6. The government’s fiscal policies will remain tight throughout the period, with the

budget deficit on a commitment basis accounting for around 1 -2 percent of GDP

throughout the programmed period. Further improvements in revenue collection are

foreseen through improvements in the efficiency of the tax administration. A sustained

effort will be made throughout the period to further consolidate non-priority

government expenditures, while improving the efficiency and targeting of the

expenditure program in line with the government’s fiscal reform and poverty

alleviation program.

7. Monetary policy will remain tight. Reserve money is programmed to increase at

slightly over the rate of growth of prices, allowing for a slight increase in money

demand over the period. The government’s prudent monetary and fiscal stance will

allow the increase in credit to the economy’s private sector. The exchange rate will

continue to reflect market conditions, with intervention in the foreign exchange market

limited to smoothing-out short run fluctuations. Gross international reserves are

programmed to increase throughout the period reaching the equivalent of over 3

months coverage of imports by the end of 2001.

8. The Government is of the view that the maintenance of Moldova’s open and

liberal trade regime is essential for encouraging investment and facilitating the

country’s export – led growth and poverty reduction strategy. The Government will

thus refrain from increasing import tariffs and intensifying trade restrictions, especially

on the export side. The current account deficit will remain modest, averaging around 6

percent of Moldova’s GDP throughout the programmed period, and following a

downward trend reflecting efficiency gains in energy consumption and robust export

growth. The deficit will be financed in part through foreign direct investment inflows

tied to privatization and other investment projects.

9. The government is well aware of the need to reduce the stock of debt and the

debt-service burden over the period. The latter will peak in 2002 accounting for over

28 percent of exports of goods and services. The Government intends to earmark a part

of privatization receipts for debt servicing or use them to retire debt. An effort will

also be made to initiate and/or complete rescheduling discussions with creditors.

10. Underpinning the above macroeconomic policy, the Government is of the view

that structural reforms are necessary in order to ensure the economy’s growth and

development in the medium term. It, therefore, remains committed to further progress

in its structural reform program whose measures are outlined in the Appendix B..1

APPENDIX B: Policy Measures for Sustainable and Inclusive Economic Growth and Poverty Reduction


Sector/Policy Area Objectives Strategies or Measures Timing

A. Sustainable and Inclusive Economic Growth

1. Macroeconomic Framework Acceleration and Sustainable Economic Growth

a) Overall Fiscal Policy Create stable macroeconomic environment

conducive to economic growth through prudent

fiscal policy

1. Approve a budget consistent with program objectives. The overall cash

deficit of the consolidated budget (IMF definition) should be no more than

MDL 400 million lei.


2. Collect tax and non-tax revenue of the central and local budgets in cash and

further reduce the share of netting-out operations to 3 percent.


b) Tax Policy Broaden tax base to ensure equity and efficient tax

system and improved tax effort

1. Submission to the Parliament of a draft code on local taxes and fees. 2nd half of 2001

2. Parliamentary approval of tax administration chapter of tax code. Mar-01

3. Approval of the law on real estate and the property valuation method. 2nd half of 2001

4. Refrain from introducing new exemptions and providing tax privileges. 2001

5. Eliminate zero rates on energy and refrain from setting zero rates. 2003

Simplify tax regime for small enterprises Analyze applicability of a presumptive tax law on small enterprises to draw new

private business into the tax net.


Rationalize excise taxes 1. Eliminate excise tax on all goods except tobacco products, alcohol and

alcoholic beverages, imported cars, and petroleum products, while increasing

the rates on these respective products.


2. Introduce ad valorem excise taxes (whenever possible). 2002.2

Sector/Policy Area Objectives Strategies or Measures Timing

Improve efficiency of Social Fund's collections 1. In-kind collections will be restricted to agricultural products, foodstuffs, and

communal services.


2. According to an agreed schedule move to a cash-only basis for Social

contribution collections.


c) Public Expenditure Policy Eliminate budgetary arrears 1. Reduce stock of budgetary arrears by at least 100 million. 2001

2. Eliminate arrears for pensions and wages. 2002

3. Verify, with the assistance from the IMF, outstanding claims on government,

including those related to energy, and adopt a plan to restructure the verified



4. Refrain from accumulating any new budgetary arrears (including for energy). Continuous

Limit subsidies in the budget 1. Rationalize subsidies to the agricultural sector (Agricultural Support Fund). Continuous

2. Abstain from introducing unfunded and/or untargeted privileges for energy



d) Monetary Policy and Financial

Sector Reform

(i) Monetary Policy Lower inflation and interest rate on credit 1. Target reserve money growth that is consistent with the inflation target. Continuous

2. Maintain stock of gross international reserves equivalent to three months of

import coverage.


3. Gradually lower reserve requirements. Continuous

4. Steady conversion of the stock of central bank credit to the government into

treasury bills.


5. Continue with quarterly profit transfer mechanism for the NBM profits to the

government based on realized net revenue.


(ii) Financial Sector Reforms Amend the financial institution law Submission to the Parliament of amendments to the law on financial institutions

in order to transfer responsibility of nominating the administrators and the

liquidation of banks to the courts.

2001, IQ

Improve bankruptcy and collateral procedures Submission to Parliament of draft laws on Bankruptcy and Collateral. 2001

Combat money laundering Approval of Law on Money Laundering Prevention and Combating. 2002.3

Sector/Policy Area Objectives Strategies or Measures Timing

e) Exchange Rate and Trade


(i) Exchange Rate Policy Maintain stable and competitive exchange rate


Continue to maintain an exchange and payments system that is free of

restrictions on current international transactions.


(ii) Trade Policy Liberalize foreign trade 1. Refrain from increasing import tariffs. 2001

2. Eliminate remaining export bans (e.g. on wheat) and refrain from introducing

new ones.


f) Public Debt Policy and


(i) Public Debt Policy Prudent public debt policy Complete and implement the Government’s public debt strategy. 2001-2003

(ii) Public Debt Management Strengthen debt management department 1. Merge departments dealing with domestic and external debt. First quarter, 2001

2. Improve analytical capacity for asset and liability management. In particular,

(a) improve cash management practices, and (b) link borrowing strategy to debt

sustainability and debt service profile analysis.


3. Strengthen capacity for dealing with on lending -- both issuance and



4. Develop a strategy for collection and settlement of guarantee portfolio;

implement strategy.


2. Public Sector Reform Build a market-oriented and service/client oriented,

merit-based, de-politicized, and corruption resistant

public administration that meets EU "best practice"

standards, and is affordable and fiscally sustainable

a) Public Administration and

Civil Service

Reform of public administration and civil service 1. Adopt Public Administration and Civil Service Reform Strategies and an

action plan for their implementation.


2. Complete survey of wages and benefits of public servants and budgetary

sector employees and publish wage grid and information about other benefits.


b) Fiscal Decentralization and

Local Government Reform


Streamline inter-government fiscal relations 1. Review the existing organic laws on the budget system, territorial

administration, local public finance, and Tax Codes aiming at removing


mid 2001

2. Finalize the transfer of property rights to subnational governments. End 2000.4

Sector/Policy Area Objectives Strategies or Measures Timing

c) Public Resource Management

(i) Public Expenditure


Streamline and improve budget Management Implement the medium-term expenditure framework (MTEF) with assistance

from donors.


Strengthen treasury management 1. Extend the coverage of the treasury to local governments. 2001

2. Establish a Cash Management Unit in the Treasury to improve the system of

cash forecasting and operational cash management.


Strengthen Social Fund management Develop an action plan for rationalizing the social assistance policy and

strengthening expenditure management of the Social Fund.


(ii) Tax Administration Strengthen tax administration 1. Reorganize the large Taxpayer Unit in line with IMF recommendations. 2001

2. Develop comprehensive debts collection enforcement program and a

reporting system for the State Tax Inspectorate (STI) to monitor the collection

of arrears at all levels of the tax administration. Develop an audit strategy for

the STI that includes a broader coverage of taxpayers, improved automation,

and improve selection techniques, and audit methods.


3. Submit a plan to revise the fiscal posts system and implement the plan. 2001

Ensure that the STI is the only collection agency of

cash contributions

Rationalize social contribution collection to ensure that the STI can effectively

serve as the sole collection agency when in-kind collection phases out; develop

operational arrangement for the timely transfer of information between STI and

the National Social Insurance House.


(iii) Customs Administration Modernize customs administration Implement ASYCUDA System. 2001

3. Private Sector Development Encourage private sector-led-growth

a) Overall Sector Strategy 1. Conduct a growth study to determine the sources of growth based on the

country’s comparative advantage.


2. Develop an export promotion strategy. 2001.5

Sector/Policy Area Objectives Strategies or Measures Timing

b) Policy Framework for

Attraction of Foreign Direct

Investment and Promote Small and

Medium Enterprises

Improve business environment 1. Compile and analyze surveys and reviews in the area of barriers to private

sector activities.


2. Identify measures for additional study, if any, in this area. 2001

3. Develop an action plan including specific proposal for eliminating barriers

and encouraging economic activities.


Deregulate the private sector with an aim to improve

public sector interaction vis-a-vis the private sector

1. Adopt an action plan to establish a consultative mechanism to review all

regulations affecting business and to equip it with technical capacity to review

proposals for new and/or existing laws, regulations, and policies.


2. Set a limit on the number and frequency of inspections and implement a

mechanism for enforcing the limit (such as establishing and checking official

inspection registries at each enterprise).


Rationalize the licensing regime 1. Review all licenses in the law on licensing. 2001

2. Eliminate all unnecessary licenses.

Streamline the registration process 1. Combine all registration information (name, finance operation, police

registration, etc.) into one form, which is processed through one window in one

government agency.


2. Eliminate re-registration of business, except in the cases of explicit material

changes in the enterprise.


3. All re-registration and updates should be handled through the same window

as original registration and in the same manner.


Improve corporate governance 1. Improve the legal framework for corporate governance:

(a) Clarify land ownership rights of enterprises,

(b) Review regulations and operations of investment funds with the

purpose of strengthening their corporate governance and efficiency,


(c) Develop action plan(s) to improve corporate governance (including

achievement of transparent accounting standards, protection of

minority shareholder rights, establishment of transparency and

clearly defined rules for stock market operations and improved

market supervision).


Sector/Policy Area Objectives Strategies or Measures Timing

2. Initiate bankruptcy/restructuring procedures against 24 loss-making firms

with arrears to the budget exceeding MDL 3 million.


3. Parliamentary approval of a market oriented Civil Code. 2001

c) Privatization of Key Strategic


(i) Wineries 1. Parliamentary approval of the individual privatization plans for five wineries. 2000

2. Launch tender for sale of 5 main state wineries. 2001

(ii) Tobacco 1. Carry out policy review that addresses issues of competition policy, tax and

trade policy, health and environmental issues and tobacco control.

2001 Privatize and rejuvenate the tobacco sector in a way

that maximizes growth and revenue benefits, but

minimizes negative externalities, including threats

to health of the population. 2. Develop tobacco control programs in collaboration with the Ministry of



3. Prepare a privatization strategy for the sector. 2001

4. Privatize the tobacco industry. 2002

(iii) Telecommunication and

the "Web Economy"

1. Establish a Telecommunications Regulatory Agency. 2000 Encourage inclusive and sustainable participation in

the new form of economic organization based on

the Internet - known as the "Web Economy" 2. Adjust telecom tariffs to levels consistent with a viable private sector telecom



3. Hire an advisor to assist in preparation and transaction of Moldtelecom.

Launch tender for a majority stake by strategic investor in Moldtelecom.


Sector/Policy Area Objectives Strategies or Measures Timing

4. Sector Specific

a) Agriculture and Rural


Increase rural incomes and living standards by

promoting rural entrepreneurship, agricultural

production, economic diversification, and trade in

rural areas

Mass registration in territorial cadastre offices of 1.2 million privatized land


End 2000

Complete liquidation of all state farms in Land project. End 2001 (except Gagauzia)

Create an appropriate legal framework to promote the creation and functioning

of producer and service cooperatives.


Establish legal, tax and accounting framework conducive to the operation of

financial leasing facilities for machinery and equipment.


b) Energy Privatize energy sector Launch competitive tenders for privatization of power generation companies

and non-privatized distribution companies (Red North and Red Northwest) to

strategic investors.


Improve heating efficiency 1. Decentralize/municipalize district heating company “Termocomenergo” into

smaller companies and transfer them into the ownership of regional/municipal



2. Develop strategy to improve heating efficiency of public and residential



Create competitive electricity trading market Maintain legal and regulatory framework in the energy sector and adopt market

rules for electricity trading which would facilitate establishment of a strong

competitive electricity market, conducive to private sector involvement.


Improve efficiency of gas consumption Install sensors (metering devices) on the accesses of the high-pressured pipeline

running through Moldova’s territory in order to gauge actual gas consumption

and gas transit.


B. Human Development Promote Sustainable Human Development

1. Overall Sectors Rationalize education and health expenditures 1. Complete expenditure review of health and education sectors. 2001

2. Develop plans to reform the education and health sectors and improve their



3. Implement the reform plans. 2001.8

Sector/Policy Area Objectives Strategies or Measures Timing

4. Maintain health and education sector budgets in real terms at least at the level

of the 2000 budget. Improve targeting of health and education expenditures to

the most vulnerable groups of the population.


2. Education Improve the efficiency of the educational system

and maintain fiscal sustainability

1. Adopt a strategy and an implementation plan for Reform of the Education

Sector, in consultation with the World Bank.


2. Promote access to, and retention in, basic and secondary education for poor



3. Improve the governance and accountability of education system Continuous

3. Health .

Improve access to primary health care, especially in

rural areas

1. Restructure the provider network to reduce over-capacity and redirect

resources from curative tertiary level care towards basic health care provided at

the primary level.


2. Strengthen the primary care network so that it can meet most of the

population's health needs and improve the quality of services provided.


Implement the health sector reform strategy 1. Official participation of the private sector in health care financing through

normalization of user charges.


2. Improve intra-sectional resource allocation to better align the allocation of

health care resources to the health needs of the population.


C. Social Protection and Direct Measures to Alleviate Poverty

1. Social Assistance Reform Alleviate child poverty 1. Address child poverty through programs in education, health and social



2. Interventions aiming at ensuring adequate levels of food security and child

care, and the social protection of orphans and disabled children.


Reform of the pension system Implement a reformed pension policy that would strengthen the linkage between

contribution and benefit, eliminate various privileged pensions, and tighten the

eligibility criterion.


2. Labor Market Policy Improve the functioning of a labor market and

employment policy

1. Undertake a comprehensive analysis on the labor market developments and

the impact of structural reforms on the employment, job creation, and wage



2. Identify and remove the legal constraints on the functioning of a flexible

labor market.


3. Evaluate the efficiency of the existing labor market programs such as job

searching and retraining and work out a new design.

2002.Appendix C: Monitoring indicators

Table 1: Life expectancy and fertility indicators, 1990-1999

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Male life expectancy at birth (years)

Moldova 65.0 64.3 63.9 64.3 62.3 61.8 62.9 62.9 n/a n/a

CIS 64.3 64.2 63.2 61.0 60.2 60.5 61.4 62.3 62.8 n/a

EU 73.1 73.2 73.5 73.6 74.1 74.2 74.4 74.4 74.5 n/a

Europe 69.0 69.0 68.8 68.1 68.1 68.2 68.7 69.2 n/a n/a

Female life expectancy at birth (years)

Moldova 71.8 71.0 71.9 71.1 69.8 69.7 70.4 70.3 n/a n/a

CIS 74.0 74.1 73.6 72.2 71.7 71.9 72.4 72.9 73.2 n/a

EU 79.8 79.9 80.3 80.3 80.7 80.8 81.0 80.9 80.9 n/a

Europe 76.9 77.1 77.1 76.6 76.7 76.8 77.1 77.4 n/a n/a

Crude death rate (per 1000)

Moldova 9.7 10.5 10.2 10.7 11.8 12.2 11.5 11.9 11.1 10.1

CIS 10.4 10.7 11.2 12.7 13.4 13.2 12.7 12.3 12.1 n/a

EU 10.2 10.2 10.0 10.2 9.9 10.0 10. 9.9 n/a n/a

Europe 10.3 10.5 10.6 11.2 11.4 11.3 11.1 10.9 n/a n/a

Natural increase (per 1000)

Moldova 8.0 6.0 5.8 4.5 2.5 0.8 0.5 0.0 -0.2 -1.3

CIS 16.8 16.0 14.7 13.5 10.0 12.7 11.9 11.4 11.2 n/a

EU 10.0 11.7 11.5 11.2 10.9 10.8 10.8 10.8 10.7 n/a

Europe 14.1 13.6 13.0 12.3 11.9 11.6 11.3 11.1 10.9 n/a

Fertility rate (births per woman)

Moldova 2.39 2.26 2.21 2.10 1.95 1.76 1.60 1.67 n/a n/a

CIS n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

EU n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Europe n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a.Table 2: Health indicators, 1990-1999

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Infant mortality rate (per 1,000 births)

Moldova 19.0 19.8 18.4 21.5 22.6 21.2 20.2 19.8 17.5 18.2

CIS 22.0 23.0 24.0 24.9 23.0 21.7 20.6 20.0 18.6 n/a

EU 7.6 7.4 6.9 6.5 6.1 5.7 5.5 n/a n/a n/a

Europe 15.4 15.4 15.3 15.1 14.2 13.2 12.4 11.9 n/a n/a

Maternal mortality rate (per 100,000 births)

Moldova 53.2 48.4 51.3 51.8 25.8 40.8 40.2 48.3 36.3 28.6

CIS 40.7 41.7 41.8 41.3 41.0 40.9 36.8 38.0 35.1 n/a

EU 7.8 7.3 7.4 5.7 6.6 5.9 7.1 n/a n/a n/a

Europe 24.9 24.5 23.7 22.3 22.3 21.5 19.6 19.2 n/a n/a

Under-five mortality rate

Moldova n/a n/a n/a 28.0 29.1 27.3 26.4 26.5 22.8 23.6

CIS 29.0 30.3 31.7 34.2 32.1 30.3 28.3 27.6 25.9 n/a

EU 9.1 8.9 8.2 7.8 7.3 6.9 6.7 n/a n/a n/a

Europe 19.6 19.6 19.5 19.9 18.8 17.5 16.3 15.7 n/a n/a

Immunization rate – diphteria, pertussis, tetanus (percent of children under 2)

Moldova 86.5 86.0 89.0 85.2 92.0 97.0 97.7 98.0 97.4 97.4

CIS n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

EU n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Europe n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Immunization rate – polio (percent of children under 2)

Moldova 91.1 89.0 93.0 91.8 94.0 97.0 98.6 98.4 97.6 97.6

CIS n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

EU n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Europe n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Immunization rate – measles (percent of children under 2)

Moldova 93.8 93.0 92.0 92.0 95.0 98.0 98.4 98.9 99.2 98.8

CIS n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

EU n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Europe n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Physicians (number per 10,000 population)

Moldova 37.4 37.5 37.4 37.9 38.0 37.1 37.5 37.4 37.6 33.7

CIS 40.0 39.9 38.7 39.2 38.2 38.3 36.7 36.8 37.3 n/a

EU 31.0 31.8 32.5 33.2 33.5 34.2 34.5 34.8 n/a n/a

Europe 33.4 33.8 33.8 34.3 34.1 34.5 34.1 34.4 34.6 n/a

Nurses (number per 10,000 population)

Moldova 103.7 106.3 106.5 107.2 104.0 99.0 95.1 93.0 89.5 79.1

CIS 101.1 94.3 92.4 93.1 90.2 89.3 82.0 80.7 80.0 n/a

EU n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Europe 86.5 80.5 79.7 80.4 80.0 78.7 76.3 75.7 75.4 n/a.Table 3: Education indicators, 1990-1999

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Basic education enrollments rate

Moldova 95.6 94.4 95.9 93.7 92.3 93.1 92.7 92.5 92.7 95.4

Western CIS 93.6 93.4 92.9 92.0 91.6 92.1 92.1 91.9 n/a n/a

SEE 92.9 91.7 90.2 90.3 91.1 93.2 93.8 94.5 n/a n/a

General secondary education enrollments rate

Moldova 26.6 22.6 24.1 24.8 25.3 25.6 27.3 29.3 31.7 28.8

Western CIS 24.8 28.0 23.8 23.2 24.0 24.5 26.1 27.8 n/a n/a

SEE 22.5 24.7 25.6 26.0 26.8 26.9 27.8 28.4 n/a n/a

Total secondary education enrollments rate

Moldova 65.0 61.6 51.6 48.5 47.7 44.6 45.4 46.2 48.3 n/a

Western CIS 71.9 69.9 67.9 66.0 64.4 63.7 64.7 63.7 n/a n/a

SEE 80.7 70.0 62.1 59.0 59.2 59.7 60.1 60.2 n/a n/a

Pupil-teacher ratio in basic education

Moldova 12.4 12.6 12.4 12.5 18.1 18.7 19.2 19.2 19.3 n/a

Western CIS 12.9 12.5 12.2 11.8 11.7 11.8 11.4 11.2 n/a n/a

SEE 16.9 16.4 15.6 15.4 15.6 15.4 15.3 15.8 n/a n/a.1

Appendix D: Work Program for the Preparation of the PRSP

Activities Stakeholders Time Frame

1. Set up a Coordination Structure and draft the Interim PRSP

(a) Establish a PRSP Steering Committee formed of

members of the Cabinet and headed by the Prime Minister.

GoM July 2000

(b) Establish an Inter-ministerial Working Group responsible

for the preparation of the Interim PRSP and the coordination

of PRSP process.


July 2000

(c) Establish Sectoral Working Groups responsible for the

development of sectoral strategies.

GoM July 2000

(d) Draft the Interim PRSP (IPRSP) and circulate it inside the

Government and Parliament.


WG, Sectoral WGs

August Œ

September 2000

2. Prepare and carry out the consultative process with stakeholders

(e) Discuss the IPRSP with the country™s major development



WG, Sectoral WGs

September Œ

November 2000

(f) Conduct a national level workshop to disseminate

information and discuss the draft IPRSP.


WG, Sectoral WGs,


November 2000

(g) Establish a clear set of selection criteria for participation

and define of institutional mechanisms through which the

identified stakeholders, including representatives of civil

society, local administration and the donor community, can

participate in the preparation of the PRSP and launch the

participatory process.


WG, Sectoral WGs

December 2000

(h) Ensure the unrestrained flow of information between

stakeholders and facilitate the efficient exchange of views and

commentaries through the use of information technology.


WG, Sectoral WGs

3. Develop and refine the data base required for targeted poverty alleviation and monitoring

(i) Evaluate findings of social assessments undertaken in

previous projects with direct poverty linkages (including

social protection, rural development, environment, and human



WG, Sectoral WGs

From August

2000 onwards

(j) Develop, in consultation with Moldova™s development

partners, a plan for collecting information necessary for

poverty assessment and monitoring.


WG, Sectoral WGs,


December Œ

January 2000

(k) Update, with donors™ assistance, the poverty profile

indicators based on the 2000 Household Budget Survey data.


WG, Sectoral WGs,


March 2001

(l) Complete the database on social assistance beneficiaries. Inter-ministerial

WG, Sectoral WGs,


May 2001

4. Develop sectoral strategies within a Medium Term Expenditure Framework (MTEF)

(m) Prepare a study identifying the sources of sustainable

growth, focusing on the improvement in the investment

climate and the development of Moldova™s export industries.

MoER, Sectoral

WGs April 2001.2

(n) Prepare poverty reduction strategies in health, education,

public works, labor and social protection and rural


Sectoral WGs,

MoH, MoES,


May 2001

(o) Prepare a PRSP status report setting out poverty reduction

guidelines for the 2002-2004 MTEF process.

Sectoral WGs,

MoH, MoES,


June 2001

(p) Prepare draft expenditure plans for the 2002-2004 MTEF

consistent with the sector resources framework the strategic

objectives identified in the sector expenditure strategies and

the poverty reduction guidelines in the PRSP status report.

Sectoral WGs,

MoH, MoES,

MoLSPF, MoAPI July 2001

5. Complete the full PRSP

(q) Analyze the information gathered through the consultative

process, present it to the Steering Committee, and incorporate

the findings into the PRSP document.

Working Group June ΠSeptember


(r) Organize a Consensus Building/Validation Workshop to

review and finalize the PRSP.

Working Group October 2001