Moldova Emergency Response, Resilience, and Competitiveness DPO2

About the project

This DPO aimed to help the authorities mitigate the economic impact of the war in Ukraine, while maintaining the momentum on the long-term agenda.

• Mitigate the impact of the war in Ukraine on refugees and households (Pillar 1): The long-term management and integration of refugees from Ukraine is important not only from a solidarity standpoint but also for social cohesion in the host communities. In this context, the operation supports the establishment of comprehensive framework for long-term refugee management, including housing, social assistance, schooling, and employment. Moreover, the operation supports measures to mitigate the immediate impact of higher energy prices, while improving the design of the main social assistance program (Ajutor Social) for future shocks, especially for family with children.
• Build resilience and enhance competitiveness to reduce vulnerabilities to future shocks (Pillar 2): The 2021 SCD Update highlights the urgent need to build resilience, given Moldova’s inherent vulnerability associated with a small landlocked economy, its reliance on food and energy imports, and an increasing frequency of natural disasters exacerbated by climate change. In this context, operation supports measures to enhance energy efficiency and the strengthening of households’ financial resilience. In view of the connectivity challenges, the operation also supports the unbundling of the railway sector to play an increasing role in successfully integrating firms, consumers, inputs, and goods within the country with regional and global markets in a more sustainable and safer manner. Also strategically supporting Moldova’s competitiveness in an era of rapid digitalization, as witnessed during the pandemic, the operation supports the digitalization of public services.

Project Development Objective (PDO)

The DPO aims to
1. increase support to refugees and households, and
2. build resilience and enhance competitiveness to reduce vulnerabilities to future shocks.

Project Implementation Status

The overall relevance of prior actions is rated as “satisfactory”. The PDO was appropriately expressed and closely aligned with the country’s strategic priorities and WBG engagement. It encompassed a comprehensive set of objectives, including emergency support for refugees and households, as well as long-term reforms for enhancing the competitiveness and resilience of the economy. The programmatic operation was structured around two pillars, in line with the program development objectives. It supported the government’s efforts to respond to urgent challenges stemming from the invasion, while keeping the focus on the long-term agenda of building resilience and enhancing competitiveness.

1. Pillar 1: Mitigate the impact of the war in Ukraine on refugees and households. Reforms under this pillar granted the emergency right to enter, work and study in Moldova to refugees from Ukraine. Additionally, this pillar supported the strengthening of the Ajutor Social (AS) program in terms of targeting and adequacy, and it extended the coverage and amount of the cold season benefit (APRA) in response to the surge in gas prices.
2. Pillar 2: Build resilience and enhance competitiveness to reduce vulnerabilities to future shocks. Reforms included under this pillar (i) promoted energy security and resilience through improvements in energy efficiency and renewable energy capacities; (ii) bolstered the legal, supervisory and regulatory framework of the insurance and banking sector through new capital and prudential requirements for insurance companies and higher coverage of guaranteed deposits; (iii) enhanced local infrastructure investment management through the establishment of the National Fund for Regional and Local Development (NFRLD); (iv) strengthened the legal framework of SOEs through adherence to corporate governance practices; (v) improved efficiency, safety and affordability of transport services through the reorganization of the railway sector, and (vi) reduced cost and access issues of public service delivery through digitalization.

Relevant Documents:

• Program Information Document (PID)
• World Bank Project Information Page