Growth and Resilience Development Policy Operation DPO

About the project

The proposed standalone Development Policy Operation (DPO) supports the Government of Moldova (GoM)’s efforts to assist refugees and households in the face of the fallout from Russia’s invasion of Ukraine while keeping momentum on the long-term agenda of economic convergence to the European Union (EU) and climate resilience. The operation consists of a loan in the amount of US$40 million and a further US$15.5 million amount including concessional support and a grant as described later in detail. The DPO comprises three pillars: strengthening resilience of refugees and households (Pillar 1); fostering sustainable growth through enhanced competition and private sector-led growth (Pillar 2); and supporting climate resilience (Pillar 3). Pillar 1 focuses on enhancing the last-resort social protection system ‘Ajutor Social’, supporting refugees and women’s participation in the labor market, and protecting the most vulnerable and refugee host families from rising energy costs. Pillar 2 aims to strengthen the regulatory framework for competition and the state aid system, enhance governance and competition in the energy sector, and strengthen the banking deposit guarantee scheme. Reforms in Pillar 3 promote energy efficiency, renewable energy uptake, and sustainable forest management.

Project Development Objective (PDO)

The DPO aims to (i) strengthen resilience of refugees and households, (ii) foster sustainable growth through enhanced competition and private sector-led growth, and (iii) support climate resilience.

Project Implementation Status

The standalone Moldova Supporting Growth and Resilience Development Policy Operation (DPO) was approved by the Board of Executive Directors of the World Bank on June 14, 2024, and became effective on September 11, 2024. The DPO was disbursed fully in October 2024. The operation consists of a loan in the amount of US$40 million, US$5 million in concessional support from the Global Concessional Financing Facility (GCFF) to support authorities’ efforts to deal with the refugee crisis, and US$10.5 million in grants from the Moldova – Growth, Resilience and Opportunities for Well-being (M-GROW) program (TF0C4995). The DPO and the results framework will be evaluated during the preparation of the Implementation Completion and Results (ICR) report after the operation closes in June 2026.

The DPO supports the Government of Moldova’s efforts to assist refugees and households in the face of the fallout from Russia’s invasion of Ukraine while keeping the momentum on the long-term agenda of economic convergence to the European Union (EU) and of climate resilience. The DPO comprises three pillars: strengthening resilience of refugees and households (Pillar 1); fostering sustainable growth through enhanced competition and private sector-led growth (Pillar 2); and supporting climate resilience (Pillar 3).

Measures in Pillar 1 aimed to strengthen the resilience of refugees and households, including those hosting refugees. The operation supported short-term priorities, which revolve around maintaining support to the most vulnerable to mitigate the impact of the multiple crisis, including strengthening the last-resort social assistance initiative ‘Ajutor Social program’ through the introduction of a case management approach to increase its impact and facilitate the graduation of beneficiaries.

Given low labor force participation in Moldova, particularly among refugees and women, Pillar 1 further supported amendments to the Labor Code (Prior Action #2) to increase flexibility in hiring refugees and women, thereby creating more employment opportunities, and fostering a more diverse and inclusive workforce. This aligns with the UNHCR’s 2023 findings that employment is a critical need for Ukrainian refugees in Moldova, who constitute about 5 percent of the total population. The reforms, which introduce more flexible work arrangements like fixed-term contracts, aim to empower female refugees who juggle caregiving with the need to earn an income, particularly those lacking skills for permanent roles or unable to work full-time. This shift from lowerpaid roles to more secure employment is expected to significantly increase Ukrainian refugee employment, thereby enhancing their income and facilitating economic integration.

• Prior Action #2. The Borrower has amended the Labor Code to (i) increase flexibility on hiring (a) youth workers for light tasks and (b) refugees to perform temporary or permanent tasks; and (ii) remove restrictions on the employment of pregnant women including for the offering of work during non-working holidays, weekends, or night shifts by allowing such employment at the request of women who meet the requirements, as evidenced by Art. I of Law No. LP46/2024 dated March 14, 2024, and published in the Official Gazette on March 18, 2024.

Moreover, Pillar 1 supported measures to protect vulnerable groups, especially low-income and refugee-hosting households, from rising energy costs (Prior Action #3). Energy affordability has been a long-standing challenge in Moldova, particularly affecting poorer and rural households. The government’s cold season benefit APRA and the Energy Vulnerability Reduction Fund (EVRF) have mitigated the impact of rising energy prices through on-bill reductions. This DPO supports amendments to the EVRF to improve its targeting and the introduction of monetized benefits (in lieu of on-bill reductions or subsidies), supporting low-income households and those hosting refugees. This initiative not only lessen the financial burden on hosts but also make hosting more attractive, encouraging greater community involvement in supporting refugees.

• Prior Action #3. The Borrower has enacted amendments to the Energy Vulnerability Reduction Fund legislation to (i) improve the targeting through the introduction of two additional energy vulnerability categories, as evidenced by Law No. 261/2023, dated August 17, 2023, and published in the Official Gazette on September 15, 2023, and (ii) introduce a monetized benefit for households categorized with very high or extreme energy vulnerability, as evidenced by Government Decision No. HG920/2023, dated November 22, 2023, and published in the Official Gazette on November 24, 2023.

The results framework concentrated on the following metrics: the percentage of refugees with fixed and open-ended work contracts, including the proportion of women among them; and the percentage of recipients of the Emergency Vulnerable Refugee Fund (EVRF) who receive a monetized benefit, including the proportion of refugee host families.

 

General update on refugee population and regulatory framework:

As of January 2025, Moldova hosted about 127,786 refugees from Ukraine (compared to 118,468 in May 2024 during the preparation of the “Moldova Supporting Growth and Resilience” DPO). Of this, about 86 percent of these refugees are women, and girls and boys under 18. About 68,187 or 53 percent of total refugees from Ukraine had registered for temporary protection (compared to 44,786 or 34 percent in May 2024).

With the shift from emergency influx to protracted displacement, the Government of Moldova is committed to long-term policy reforms and socio-economic integration of displaced people. The government has amended the Law on Asylum to align with EU standards and support self-reliance and integration of refugees by:

1. Removing the two-year limit on temporary protection.
2. Extending the duration of stay and institutionalizing employment support for temporary protection holders.
3. Establishing material reception conditions for asylum seekers, such as housing, food, and medical support, providing more stable living conditions.
4. Expanding the list of vulnerable categories requiring specialized support services.

This transition means Ukrainian temporary protection holders will now have their legal status governed by the Law on Asylum, rather than temporary executive decisions. This represents a significant improvement in the legal framework for refugees. A sustainable protection system and secure legal status are essential for the employability and long-term integration of displaced persons, reducing reliance on temporary measures and improving access to services like employment support.

 

Updates on employment opportunities (Prior Action #2):

The results indicator measures the percentage of refugees with fixed and open-ended work contracts after registering with the National Agency for Employment of Moldova (ANOFM), of which women (percent). In 2023, the baseline figure was 28 percent (844 refugees registered with ANOFM, of which 239 were employed), with 23 percent for women. The objective was to reach 40 percent overall employment by 2025, with 38 percent for women. In 2024, according to data from ANOFM, the share increased to 50 percent (539 registered with ANOFM, of which 272 were employed), with 47 percent for women and 56 percent for men, surpassing the 2025 target value. Although the total number of registered refugees with ANOFM declined, their probability of employment increased.

The number of registered and employed women rose by almost 50 percent in 2024 (from 96 in 2023 to 142 in 2024), while the number for men decreased by 13 percent (from 143 in 2023 to 130 in 2024). Consequently, the gender gap between 2023 and 2024 narrowed. As highlighted in the general updates, the approval of the Law on Asylum is anticipated to enhance and secure long-term employment opportunities for displaced persons. This will be achieved through formalized employment support and services, as well as improved reception conditions that align with EU standards.

 

Updates on heating support (Prior Action #3):

The results indicator measures the percentage of recipients of the EVRF that receive a monetized benefit, including refugee host families. In 2023, the baseline figure was 36 percent (out of approximately 1,080,000 households, 775,414 received EVRF, and 277,269 received monetized benefits), with 29 percent for refugee host families (out of about 11,000 host families, 5,914 received EVRF, and 1,707 received monetized benefits). The objective was to reach 100 percent for all eligible beneficiaries, including refugee host families, by 2025.

The EVRF has been extended into the 2024/25 heating season, providing targeted cash transfers (monetized benefits) to households (in lieu of on-bill reductions or subsidies), in line with the prior action in the “Moldova Supporting Growth and Resilience” DPO and the IMF Resilience and Sustainability Facility (RSF) program conditions. This heating support has been critical for local families and those hosting refugees, especially given the new energy crisis, which resulted in significant increases in gas and electricity tariffs in December 2024 and January 2025.

Of the approximately 703,000 submitted requests, about 634,000 households have received compensation from the EVRF from November 2024. The number of households receiving compensation has increased further during the heating season, estimated at 680,000 in December 2024. All of these households received monetized benefits, including refugee host families, achieving the 2025 target value. Currently, specific information on the total number of host families is not available, which will be reported to GCFF upon the close of the project.

Relevant Documents:

• • Program Information Document (PID)