Economic development of Moldova: challenges and prospects
Recommendation 1605 (2003)

Doc. 10036
24 January 2004

Reply from the Committee of Ministers
adopted at the 869^th meeting of the Ministers’ Deputies (21 January 2004)

1.         The Committee of Ministers has taken note of Recommendation 1605 (2003) of the Parliamentary Assembly on the economic development of Moldova: challenges and prospects.  It thanks the Assembly for its interesting analysis of the situation and the very full set of measures which it recommends for the various member States of the Council of Europe and for Moldova specifically, with a view to promoting the country’s economic growth.

2.         The Committee of Ministers has communicated the recommendation to the governments of member States so that they can take account of the Assembly’s proposals in their bilateral and multilateral co-operation agreements with Moldova and their other partners.  The Committee of Ministers has also forwarded Recommendation 1605 (2003) to the European Union, the Secretariat of the Paris Club and the World Trade Organisation (WTO) for information.

3.         Furthermore, the Committee of Ministers considers that local and regional authorities have an important role to play in economic development. It therefore encourages decentralised co-operation, as well as partnerships between towns and regions of Moldova and the European Union, which are essential tools in the achievement of stability and strengthening of local and regional democracy.  The conference of the Congress of local and regional authorities of the Council of Europe on “small and medium-sized enterprises and sustainable development” to be held in 2004, as well as its activities linked to the study of the local authorities’ role in the fight against poverty, should contribute to this process.

4.         The Committee of Ministers would join the Assembly in welcoming the commitment of the Moldovan authorities and their efforts to reduce poverty.  It has taken note of the information supplied by the Moldovan authorities to the effect that the National Economic Growth and Poverty Reduction Strategy, which provides for participation by the public institutions, academics and other members of civil society, should be finalised in March 2004.  One major strand in this Strategy is aimed at developing the private sector, concentrating on development of small enterprises.  A number of other legislative and regulatory measures have been adopted to develop business enterprise, facilitate exports and encourage investment.

5.         Given that the Assembly mentions the need for improved co-operation between Moldova and the Council of Europe Development Bank (CEB), the Committee of Ministers decided to communicate Recommendation 1605 (2003) to the CEB with a view to securing its comments on the matter.  In the light of these comments, which are appended to the present reply, the Committee of Ministers welcomes the fact that the conditions are now fulfilled for Moldova’s entitlement to project funding by the CEB, in accordance with the Bank’s statutory objectives, including the conditions provided for under the Selective Trust Account and that a first project was approved in November 2003.

6.         The Council of Europe is expanding its assistance to Moldova in a wide variety of fields, particularly under the new joint Council of Europe/European Commission programme, which devotes a special section to improving access to social rights in Moldova.  This programme is specifically aimed at vulnerable groups heavily affected by the socio-economic situation in Moldova, and will be implemented in 2004 and 2005.

7.         The Committee of Ministers would also like to mention the following activities:

- technical assistance aimed at promoting social security instruments, thanks to which Moldova was able to sign the European Convention on Social Security in May 2002 and the European Code of Social Security in September 2003;

- technical assistance offered through the Joint Programme between the Council of Europe and CEB for developing feasibility studies in the social cohesion field and,

- the activities launched in the social security, housing and employment fields as part of the social cohesion scheme under the Stability Pact, in which Moldova is actively participating.

8.         The Committee of Ministers is well aware that a major obstacle to sustainable economic development in Moldova is the Transnistrian issue. It therefore attaches particular importance to the peaceful settlement of this problem.  This would reunite the country and establish a single legal, economic and customs entity, thus boosting trade and economic development in general.

Appendix

Council of Europe Development Bank (CEB)

Comments of the Governing Board on Parliamentary Assembly Recommendation 1605 (2003)

1.         The Governing Board took note of Recommendation 1605 (2003) of the Parliamentary Assembly and in particular paragraph 9 recommending that the Committee of Ministers invite Moldova to step up its co-operation with the CEB with a view to resolving the outstanding issue of Moldova’s contribution, which was due following its accession to the bank, and the subsequent speedy identification of projects for financing in priority fields which could benefit from subsidies of the CEB Selective Trust Account, notably facilities for the return of victims of trafficking in human beings and measures to prevent such trafficking.

2.         In March 2003, Moldova regularised its situation regarding the payment of its contribution to the capital and reserves of the Council of Europe Development Bank. Since then, the CEB has therefore been in a position to finance projects from Moldova.  At its 228th meeting (19-20 November 2003), the Administrative Council of the Development Bank approved the first loan for Moldova.  This loan totalling 6 million euros is for part-financing a programme aimed at improving the quality and efficiency of the Moldovan healthcare system by upgrading the supply, quality and safety of blood and blood products at all stages in the process, from collection to transfusion.  The preparation of the project was the result of close co-operation between the Moldovan authorities, the CEB and the Directorate General of Social Cohesion of the Council of Europe, through the CEB/CoE joint programme.

3.         At the same meeting, the Administrative Council updated, in accordance with Resolution 1437 (1999), the list of countries eligible under the Selective Trust Account, in line with the latest available data (per capita gross national income (GNI), broken down according to income groups) published by the World Bank.  The Governing Board points out that Moldova is one of the countries eligible under the Selective Trust Account.

4.         The Governing Board also took note of paragraph 4 of Recommendation 1605 (2003), underlining the importance of providing genuine support to small and medium-sized enterprises to enable them to create jobs.  In this respect, it underlines that supporting employment and encouraging the development of SMEs is one of the CEB’s new priorities.  In the course of the last five years, the CEB has approved loans for over 1.4 billion euros in the fields of job creation in SMEs and vocational training.  These loans represent approximately 15% of the total amount of loans approved during this period.  In recent years, the Bank has financed several projects in this sector in South-Eastern Europe, particularly in Albania, Bulgaria, Croatia, Romania and “the former Yugoslav Republic of Macedonia”.