Moody's: Moldova has limited economic base

Moody's Investors Service said in its annual report on Moldova that the country's speculative-grade ratings reflect its limited economic base, the need for extensive structural reforms and its vulnerability to energy price fluctuations given its reliance on imported energy.

Moldova's B3 foreign currency bond ceiling is based on the foreign currency government bond rating of Caa1 and Moody's assessment of a high risk of a payments moratorium in the event of a government bond default.

"The ruling Communist Party has not provided consistent, thorough structural reforms, slowing the development of the private sector," said Moody's vice president Jonathan Schiffer, author of the report.

"But Moldova's solid performance under the IMFs poverty reduction and growth facility agreement and its action plan with the EU may stimulate the necessary reforms as all political parties now agree on the importance of attaining EU membership."

He said that key structural reforms in energy and agriculture have made some progress, but much more needs to be done in favor of privatization and deregulation.

Some reforms have also occurred in the health, education and welfare sectors, which represent half of budgetary expenditures, Moody's noted.

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