Moldova Table of Contents
Within the Soviet economy, Moldova was an importer of industrial raw materials, fossil fuels, and manufactured goods. Its primary exports to other Soviet republics included wine and spirits, processed foods, clothing and textiles, and small amounts of electrical equipment.
Since independence, Moldova has struggled to reorganize its domestic economy and at the same time to reorient its foreign trade, finding new markets for its products and new sources for the essential imports it traditionally obtained from the Soviet Union. In 1991, however, 73 percent of Moldova's imports and 96 percent of its exports were still directed toward territories of the former Soviet Union. In addition, Moldova had a surplus of 572 million rubles in its trade with the former Soviet republics but a deficit of 875 million rubles in its trade with the rest of the world. This disparity clearly suggested the difficulty Moldova faced in restructuring its trade relationships, given that in 1994, 73 percent of Moldova's foreign trade was with other members of the CIS, and only 27 percent was with the West. In 1994 exports totaled 2,397 million lei (US$580 million), up 20 percent from 1993, and imports totaled 2,704 million lei (US$662 million), down 12 percent from 1993, resulting in a trade deficit of 307 million lei.
By 1992 Moldova had established joint ventures with Bulgaria, Germany, Hungary, Poland, Romania, Turkey, Vietnam, and the United States, and it had signed bilateral trade agreements with China, Denmark, Italy, the Netherlands, Spain, Sweden, Serbia and Montenegro, and ten of the former Soviet republics. In 1995 Moldova's major CIS trading partners were Russia, Ukraine, and Belarus, and its major non-CIS trading partners were Romania, Germany, the United States, Bulgaria, Hungary, and Italy. Barter accounted for over 41 percent of Moldova's total volume of foreign trade in 1994.
By the end of 1992, the United States government had signed several agreements with Moldova and had granted Moldova most-favored-nation status (see Glossary). A bilateral investment treaty was signed with the Moldovan government in April 1993. The Overseas Private Investment Corporation (OPIC) had signed a bilateral agreement with Moldova authorizing OPIC to provide loans, loan guarantees, and investment insurance to United States companies investing in Moldova. As of September 1994, 314 joint ventures had been established (partners included more than fifty from Romania, more than thirty from the United States, twentyfive from Germany, and twenty from Bulgaria), but only one-third are operational. Joint ventures account for only 2.3 percent of Moldova's industrial output and substantially less than 1 percent of Moldova's employment.
In 1992 Moldova became a member of the International Monetary Fund (IMF--see Glossary) and the World Bank (see Glossary), making it eligible to receive financing for capital infrastructure projects. (The Moldovan government consulted with the IMF on a plan of economic reform that year and immediately implemented a number of reform measures.) Moldova and United States companies investing in Moldova are also eligible to receive loans from the European Bank for Reconstruction and Development (EBRD), which emphasizes programs and activities that support privatization, financial reform, industrial restructuring, the creation and strengthening of infrastructure, inflows of foreign investment, and environmental remediation. In addition, the Moldovan government has signed the Group of Seven (see Glossary) external debt agreement; its share of the external debt of the former Soviet Union was determined to be US$1.7 billion. An agreement was signed in 1993 by Moldova and Russia transferring this debt to Russia and renouncing any claims by Moldova on properties of the former Soviet Union. In November 1994, Moldova signed a partnership and cooperation agreement with the European Union (EU).
In 1992 the Moldovan parliament adopted the Law on Foreign Investment (later amended in July 1994). This law was developed in cooperation with representatives of foreign enterprises and the World Bank and is recognized as the best of all such laws in countries belonging to the CIS. Together with changes in the tax law, the Law on Foreign Investment has made Moldova a much easier place for foreign companies to do business.
By 1995 the government of Moldova had relaxed most of its restrictions on the country's foreign trade. Importers and exporters no longer had to be registered, but export licenses were still needed for certain goods, such as grains, energy resources, animal hides, and special products (including arms, precious metals, and chemical products).
Data as of June 1995
Moldova Table of Contents