Moody's rating agency assigns B3 rating to Moldova

According to the Moody’s rating, research and risk analysis agency’s annual report made public on 16 May, the B3 long-term issuer rating the agency has assigned Moldova, reflects its low resistance to crisis and political instability.

Moldova’s Gross Domestic Product (GDP) per capita is rather low, the economy is weak and highly dependent on remittances, therefore, it has a limited growth potential. Moreover, experts believe the failure to settle the Transnistrian conflict and the political deficiencies aggravate Moldova’s credit risk. However, they say the rating outlook is stable.

The company’s report reads that Moldova’s low institutional power is being triggered by the government’s weak effectiveness, increased corruption level, lack of transparency as well as by political deficiencies.

Moody’s says political risks could be caused by the tension between the main political parties in the parliament and the unsettled Transnistrian conflict. The economic risk is mostly caused by the current account’s substantial deficit and Tiraspol’s gas debt.

Moldova’s rating could worsen if the situation in the Transnistrian breakaway region rapidly deteriorates or if remittances and exports suffer a sudden decline, as a consequence of the International Monetary Fund’s (IMF) revision of economic reforms. On the other hand, the assessment could show better results if officials are more flexible when approaching the Transnistrian conflict’s settlement, the internal political situation becomes less polarised and the reforms implemented in cooperation with the IMF and the EU keep the same pace.

Adapted from Moldpres