Publication: Monitor Volume: 4 Issue: 136

Moody’s Investors Service has lowered Moldova’s sovereign rating to B-2 for hard-currency obligations and to B-3 for hard-currency bank deposits. The previous ratings were the relatively promising ones of Ba-2 and Ba-3, respectively. Moody’s had begun rating Moldova last year. The company explained the lowered ratings by pointing to the country’s diminishing credit-worthiness, significant budget deficit, growing indebtedness and dependence on external financing. The International Monetary Fund (IMF)’s resident representative in Chisinau, Mark Horton, told the local press that the new ratings can add to Moldova’s already obvious difficulties in terms of attracting foreign investment and new financing for reimbursement of existing debts. The IMF representative blamed the situation on the former government’s failure to implement overdue economic reforms. (Basapress, July 15)

Reforms in Moldova ground to a halt in the 1996 presidential election year and remained frozen until after the March 1998 parliamentary elections. No political force would risk advocating unpopular measures during electoral periods. Several more months have been wasted since March by the new parliament and government because of internal disunity. With the next presidential election due in the year 2000, Moldova has only a narrow window of opportunity to enact and implement economic reforms recommended by the IMF and other institutions.