Moldova, a former Soviet republic located between Ukraine and Romania, is the poorest country in Europe. Agriculture is the backbone of the economy and the country once served as an important exporter of high-value agriculture within the Soviet Union. However, like many former Soviet republics, irrigation was centrally managed by the state and suffered years of mismanagement and underinvestment. Following the collapse of the Soviet Union, Moldova lost its position as a key exporter of fresh produce, and its extensive irrigation systems and post-harvest cold chain 1 fell into disrepair. The government had been slow to make reforms needed in the agricultural sector to attract private investment or funding from donors with an interest in advancing Moldova’s fruit and vegetable exports. As a result, the sector suffered from low productivity, contributing to high rates of rural poverty. Still, Moldova has many of the necessary conditions to regain competitiveness in high-value agriculture and increase economic growth, including fertile soils, a relatively long growing season, and proximity to both European Union (EU) and former Soviet markets.
Like its irrigation infrastructure, Moldova’s roads deteriorated significantly, since the country gained independence in 1991, raising the cost of production and trade. To address this critical barrier to economic growth, the Government of Moldova prioritized the rebuilding of the national road network with assistance from external partners. The country’s National Development Strategy and Land Transport Infrastructure Strategy (2008-2017) represented a long-term vision to “provide the country with an efficient transport system that supports citizens’ need for mobility and which facilitates trade in domestic and international markets, with a strong view of the role Moldova can play as a bridge between EU and Commonwealth of Independent States countries.”
After successful completion of a threshold program designed to reduce government corruption in February 2010, MCC and the Government of Moldova signed a five-year, $262 million compact in September 2010 to address the constraints outlined above. The Government of Moldova and MCC estimated that the compact would benefit 414,000 people and help lay the groundwork for sustained economic growth by improving road infrastructure and supporting the country’s transition to high-value agriculture through irrigation and regulatory reforms. Under the MCC country ownership model, MCC’s counterparts are responsible for implementing MCC-funded programs. Partner governments establish entities known as accountable entities known as MCAs to manage implementation for compact projects. In Moldova, MCA-Moldova was created soon after signing the compact to implement its programs.
- Original Amount at Compact Signing:
- Amount spent:
January 22, 2010
- Entry Into Force:
September 1, 2010
September 1, 2015
Estimated benefits at the time of investment correspond to $262 million of compact funds, where cost-benefit analysis was conducted.
- 414,000Estimated beneficiaries at the time of signing over 20 years
MCC considers beneficiaries of projects to be those individuals who realize improved standards of living, primarily through higher incomes, as a result of economic gains generated by MCC-funded projects.
- $95,500,000Estimated net benefits at the time of signing over 20 years
“Estimated Net Benefits” is the sum of all projected net benefits accruing over the life of the project, typically 20 years, evaluated at a 10% discount rate. Estimates are reported in millions of US dollars in the year that the ERR analysis was completed.