moldova.md

Moldova, officially Republic of Moldova, republic (2005 est. pop. 4,455,000), c.13,000 sq mi (33,670 sq km). Chişinău (formerly Kishinev) is the capital and largest city.

Land, People, and Government

Moldova is landlocked. The Prut River separates it from Romania in the west. In the north and east, the Dniester River forms its approximate boundary with Ukraine, on which it also borders in the south; in the east there is a narrow strip of Moldovan terrritory between the Dniester and the Ukraine border (the predominantly Russian and Ukrainian Trans-Dniester Region). Mostly a hilly plain, Moldova occupies all but the southernmost and northernmost sections of former Bessarabia. Its proximity to the Black Sea gives it a mild climate.
About 65% of the population is Moldovan; Ukrainians and Russians make up more than a quarter of the people, and there are several smaller minorities, including the Turkish-speaking Gagauz, Bulgarians, and Jews. The Moldovan language, the official tongue, is virtually indistinguishable from Romanian, and the two groups are ethnically identical. Most of the people belong to the Eastern Orthodox Church.
Moldova is governed under the constitution of 1994. It has an elected 101-member parliament and a popularly elected president who serves as head of state. The country is divided into 32 raions (districts or counties), 3 municipalities, and 2 territorial units, one of which (Gagauzia) is autonomous.

Trade policy

According to the World Bank, Moldova's weighted average tariff rate in 2001 (the most recent year for which World Bank data are available) was 2.8 percent. (The World Bank has revised the figure for 2001 downward from the 3.9 percent reported in the 2005 Index.) A 2004 World Bank report notes a "range of informal barriers to both imports and exports in Moldova, such as cumbersome and restrictive trade procedures, corruption, burdensome and inappropriate regulations and high transport costs." Based on the revised trade factor methodology, Moldova's trade policy score is unchanged.


Foreign investment

The Moldovan government does not maintain many formal barriers to foreign investment, and the Moldovan embassy reports that foreign investors are free to "place their investments throughout the Republic of Moldova, in any area of business activity, as long as it does not go against the interests of the national security, anti-monopoly legislation, environment protection norms, public health and public order." However, there are significant informal barriers and indications that the formal reasons to block investment are liberally applied. According to the International Monetary Fund, "despite efforts to simplify licensing and business registration, there has been no significant improvement in the business climate. Moreover, the privatization program has stalled, while corruption remains widespread and governance weak. Government interference in the private sector…casts doubt over the authorities' commitment to market-oriented reforms." The Economist Intelligence Unit reports that the "poor investment climate, including annulments of some earlier sales, continues to deter many Western investors. Between 2001 and 2004 the government privatized less than 60 of the 480-odd enterprises scheduled for sale." Foreign investors may not purchase agricultural or forest land. The IMF reports that both residents and non-residents may hold foreign exchange accounts, but approval is required in some cases. Payments and transfers require supporting documentation and approval of the National Bank of Moldova if they exceed specified amounts. Nearly all capital transactions require approval by or registration with the National Bank of Moldova.

Banking and finance

There are no official barriers to founding foreign banks or branches in Moldova. The central bank has increased the minimum capital requirement, which is expected to contribute to consolidation in the banking sector. First Initiative reports that the banking sector "consists of 16 commercial banks (2003). There are 14 locally-owned banks, while the two remaining ones are from Russia and Romania. The banking sector is highly concentrated with the five largest banks accounting for over 70% of lending in 2002. Unlike the banking sector, the insurance sector has high levels of foreign-participation. The largest insurance firm in Moldova, the former state insurance company, is owned by an Australian company." Moldova's stock exchange is very small, listing fewer than 25 companies in 2002. The Moldovan embassy reports that the government holds shares in two banks—JSCB "Banca de Economii" SA and JSCB "EuroCreditBank"—including a controlling share of Banca de Economii. The Economist Intelligence Unit reports that foreign investment accounts for approximately 50 percent of total banking capital.

Statistics

• GDP (2005 est.)$ 2.76 billion ($ 2.6 billion in 2004; $ 2.0 billion in 2003; $ 1.6 billion in 2002; $1.5 billion in 2001).
• GDP real growth rate (January-September 2004): 5.7% (6.3% in 2003; 7.2% in 2002; 6.1% in 2001).
• Per capita GDP (2004 est.):$ 760 ($ 540 in 2003: $448 in 2002; $422 in 2001).
• Natural resources: Lignite, phosphates, gypsum, arable land, and limestone.
• Agriculture: Products--vegetables, fruits, wine and spirits, grain, sugar beets, sunflower seeds, meat, milk, eggs, tobacco, walnuts.
• Industry: Types--processed foods and beverages, including wine and refined sugar; processed fruit and vegetable products, including vegetable oil; dairy and meat products; tobacco items; metal processing and production of machinery; textiles and clothing, shoes; furniture.
• Trade (2003): Exports--$790 million (of which 46% go to countries outside the former Soviet Union): foodstuffs, wine, textiles, clothing, footwear and machinery. Major markets--Russia, Romania, Italy, Ukraine, Germany. Imports-- $1,403 million (of which 58% come from countries outside the former Soviet Union): gas, oil, coal, steel, machinery and equipment, chemical products, textiles, foodstuffs, automobiles, and other consumer durables. Major suppliers--Ukraine, Russia, Germany, Italy, Romania,
• Currency: Moldovan Leu (plural Lei).
• Exchange rate: Lei/US$ (2004): 12.33; 12.46 (end of year); (13.94 average in 2003); (13.57 average in 2002)

Investment (gross fixed): 17.1% of GDP (2004 est.)
Household income or consumption by percentage share: lowest 10%: 2.2% highest 10%: 30.7% (1997)
Distribution of family income - Gini index: 40.6 (1997)
Agriculture - products: vegetables, fruits, wine, grain, sugar beets, sunflower seed, tobacco; beef, milk
Industrial production growth rate: 17% (2003 est.)