The Republic of Moldova is a country in Eastern Europe, bordering Romania and Ukraine. The country found difficulties in maintaining a stable economy in the following decades, and despite a recent upturn in economic growth, Moldova still faces widespread poverty.

The Reform and Growth Facility

The Reform and Growth Facility for the Republic of Moldova is an economic initiative first proposed by the European Commission in 2024. This year, the European Union and the government of Moldova reached political agreements on the restrictions to the Reform Agenda, officially establishing it as the financial basis for the Country’s current Growth Plan. The European Commission is funding the plan with  €1.9 billion in financial aid from 2025 to 2027. The money will be allocated twice a year on the request of The Republic of Moldova’s parliament after the European Council confirms that all conditions of the initiative have been fulfilled.

The Economy of Moldova

Moldova is one of the poorest nations in Europe, according to the BBC. Although the Republic’s GDP has steadily increased over the past two decades, poverty and unemployment remain commonplace, especially in rural areas. For example, 13.3% of Moldovans fall below the poverty line, and nearly 25% of people between the ages of 15 and 34 do not work or attend school or apprenticeships.

Furthermore, the country’s economic structure has a multitude of underlying obstacles. For instance, it is agriculturally reliant, the BBC reports and does not produce much in the way of energy, importing a majority of its gas, oil and coal. Other structural limitations include government deficiencies, a lack of competition in the marketplace, and unequal business opportunities, all of which, according to the European Council President Ursula von der Leyen, the Reform and Growth Facility for Moldova will attempt to reform and revitalize Moldova’s economy.

The Intended Outcome

The Reform and Growth Facility for Moldova intends to provide financial support, elevate the country’s economy and bring Moldova a step closer to membership in the Europen Union. The first objective, expanding monetary assistance, will include implementing broadband internet to rural regions, as well as providing financial backing to 25,000 Moldovan businesses, according to EU4Digital.

The program also plans to contribute significant socioeconomic and structural reforms with a focus on infrastructure, the government’s role in the economy and social capital. Ursula von der Leyen put it best when she stated, “We invest in jobs, growth, services and infrastructure – from new hospitals in Balti and Cahul to the road from the capital to Odesa,” EU4Digital reports.

The Growth Facility will prioritize building sustainable energy production within Moldova by constructing a new electricity powerline that connects to the EU electricity grid, and as a result, by 2026, the country could no longer rely on energy imports. Foundationally, the Reform Plan will advocate for democracy and anti-corruption within the Moldovian government and will provide support on restructuring the economy to an open market system hinged on fair competition.

The Reform will also integrate Moldova into the European Union’s Single Market. This alone could lead to the Republic’s assimilation into global supply-chains, allowing for increased mobility of products, trade opportunities and involvement in the Digital Marketplace.

A Lesson for Foreign Aid

Since Moldova’s independence, the Reform has been the largest European Union support package, according to the European Commission. Moreover, access to the European Union’s single market has been the prominent economic growth factor for all previously included countries. It is certainly apparent though, what foreign aid can do to revitalize Moldova’s economy and reduce poverty in the country.

– Amelia Dutch Player

Amelia is based in Savannah, GA, USA and focuses on Good News and Politics for The Borgen Project.

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