Policy paper

UK–Moldova development partnership summary, July 2023

Published 17 July 2023

Introduction

The Strategy for International Development (IDS) places development at the heart of the UK’s foreign policy. It sets out a new approach to development, anchored in patient, long-term partnerships tailored to the needs of the countries with which we work, built on mutual accountability and transparency. This approach goes beyond aid and brings the combined power of the UK’s global economic, scientific, security and diplomatic strengths to our development partnerships. Our four priorities are to deliver honest, reliable investment, provide women and girls with the freedom they need to succeed, step up our life-saving humanitarian work, and take forward our work on climate change, nature and global health. The Integrated Review Refresh (IR23) reiterates that sustainable development is central to UK foreign policy and sets out how the UK will go further and faster on development to reduce poverty and reinvigorate progress towards the SDGs. This Country Development Partnership Summary details how the IDS and IR23 will be put into practice with Moldova and the Eastern Neighbourhood region.

Country context

The Republic of Moldova declared its independence in 1991, as part of the collapse of the Soviet Union. A landlocked country with a population of under 3 million, Moldova borders Ukraine to the North and East, and Romania to the West. Moldova’s eastern Transnistria region is de facto beyond the control of the Moldovan government, having declared itself independent in 1990 and fought to protect that status in the war of 1992. Russia backed Transnistria in that war and although it does not recognise Transnistria’s independence, Moscow supports it politically, economically, and militarily. Moldova is one of the poorest countries in Europe and has suffered from chronic emigration. Poor governance, and a series of corrupt and/or pro-Moscow governments have held back development.

In November 2020, this pattern began to change when Moldovans elected Maia Sandu as President on a pro-democracy, reform, and anti-corruption agenda. Sandu’s election and the subsequent success of her centre-right political party, PAS, in the July 2021 parliamentary elections meant that Presidency, Government and Parliament shared the same a pro-rule of law, pro-reform agenda.

UK aims to support greater security, prosperity and good governance in Moldova – and is a trusted partner of the current government. The Moldovan Government is committed to tackling corruption and improving governance by strengthening national institutions and reforming the justice system. Shortage of human resource constrains progress, although there is a stream of ex-patriates returning to serve the cause of reform. The Government is working to stimulate the private sector, improve strategic communications, build defence capacity, increase resilience against cyber attack and strengthen border control. The UK will continue to support Moldova in these areas, and elsewhere.

With the Russian invasion of Ukraine, Moldova has seen new challenges emerge. For example:

• inflation at over 20% (having peaked at 32%)
• more than 108,000 resident refugees
• dislocation of trading routes
• loss of export markets
• fragility of the energy grid when Ukrainian infrastructure is targeted

There is evidence that pro-Russian political groups, and actors from outside of Moldova, are using economic hardship to undermine pro-European and pro-reform government.

In June 2022, the EU granted Moldova candidate status. This is the over-riding goal of Moldovan government policy. The EU is the largest development partner to the Republic of Moldova and is working on border security, education infrastructure, governance, and economic development. EU candidate status, and support from donors, will help to ensure that despite the ongoing challenges the underlying appetite for continuing with reforms is sustained. US is also a major donor in Moldova. Germany, Sweden, Switzerland are also engaged. We regularly partner with these countries which share similar priorities: economic development, rule of law, anti-corruption and gender equality.

Increasing security whilst working towards EU membership are the two main priorities of the Moldovan Government. UK program support, from the Good Governance Fund (GGF) and the Conflict, Security and Stability Fund (CSSF) makes a useful contribution in areas such as economic growth, energy, security (cyber security) and anti-corruption.

Why and how: the UK’s development offer

The UK supports Moldova’s efforts to develop a state that is resilient to external and internal threats.

By supporting increased dialogue between government and the private sector through the Economic Council the UK has supported initiatives that helped to deliver a better business climate, enhance employment opportunities for the poorest, and initiated institutional reforms to encourage new investment. By supporting work on competitiveness of Moldovan transformative sectors the UK has sought to help Moldova diversify into western markets as well as to enhance productivity (USAID Future Technologies Activity Project).

The UK’s ‘Partnership Principles’ will guide future diplomatic and programmatic focus. When appropriate honest, patient, and reliable investment will be encouraged. There is already a strong focus on women and girls in all programmes. Humanitarian assistance for crises is being prioritised in response to ongoing needs and there will be an increasing focus on climate change, nature, and global health.

His Majesty’s Government engagement in Moldova will be guided by the goals of:

• reducing instability
• reducing inequality as a driver of instability whilst increasing opportunities for women and girls
• increasing prosperity through encouraging investment
• decreasing Moldova’s vulnerability to external and internal economic and political pressure by diversifying energy supplies in a climate-friendly way

In line with the International Development Strategy the 4 operational outcomes will focus on:

1. Resilient and inclusive economic growth

2. Strengthening state capacities to respond to all internal and external threats related to state resilience and corruption

3. A stronger and more independent media that allows the public to hold the government to account

4. Strengthened partnership between UK and Moldova, and like-minded partners, to
support UK global campaigns

All outcomes will consider women and girls.

The UK-Moldova Strategic Partnership, Trade and Cooperation Agreement (SPTCA), and work with the Department for Business and Trade, will also be developed to further reduce barriers to trade and investment. It will support growth though increasing investment and diversify trade and improving resilience. Advisory capacity will support the implementation of the four Partnership Principles and engagement on outcomes.

Who we work with

British Embassy-Chisinau has range of international and local partners. These include: the European Bank for Reconstruction and Development; the World Bank; the International Finance Corporation; the European Investment Bank; the European Union; GIZ (German technical cooperation); United Nations Development Programme; and the United States Agency for International Development; as well as key international NGOs such as Internews, and BBC Media Action.

The following outcomes/achievements have been delivered:

• government protected, and consolidated, and advances reform in selected priority areas to promote resilient economic growth and enabling business environment, and to strengthen state capacities to respond to internal and external threats related to resilience and corruption

• stronger and more independent media and increases in electoral stakeholders

Partnership with other donors remains very important to improve programme effectiveness, share risks, and also leverage our impact. Projects with development partners are also better positioned to respond to concerns around sustainability, given the longer-term nature of the challenges we face, and therefore ability to influence and link in further lending remains important.

Key programmes

Key bilateral programmes in Moldova include the Good Governance Fund (GGF) and Conflict, Security and Stability Fund (CSSF). They respond to the main outcomes. Both are structured as flexible programmes identifying and validating new activities based on evidenced revisions to the Theories of Change (which define how the desired change will be delivered). This process ensures an adaptive approach that is fully consistent with UK priorities. As a part of this process relevant stakeholders are consulted to test and challenge thinking, including for instance implementing partners. A complementary humanitarian programme (supporting 3 UN partners and capacity building for the Ministry of Labour and Social Protection) is managed by the Ukraine Humanitarian Team in close coordination with the Embassy Programme Team.

Three key Good Governance Fund projects are:

1. Moldova Energy Security Activity – with USAID, it is designed to diversify energy supply and will helps Moldova meet its clean energy goals.  It will promote energy security and reduce Moldova’s dependence on energy imports from Russia as well as improving climate resilience by laying the groundwork for future investment in renewable energy generation.

2. Support to Streamlining the Anti-corruption Law Enforcement and Prosecution Institutions in the Republic of Moldova - with GIZ, supports the Moldovan Government in defining the mandate and competencies of law enforcement and prosecution institutions to fight corruption at all levels

3. Future Technologies Activity – with USAID, will help diversify Moldova and open opportunities in western markets. The project will enhance the competitiveness of Moldovan transformative sectors, including, but not limited to light manufacturing, ICT, precision engineering, creative industries, and digital media production.

FCDO takes a robust approach to monitoring, evaluation and learning (MEL) across the region, with an independent MEL expert contracted to provide services to the programmes on demand. British Embassy-Chisinau makes systematic, use of evidence to drive decisions on strategy, portfolio, and individual projects. The MEL approach integrates principles adaptive management, to ensure that the programme can deliver in changing and politically volatile contexts. All programmes have specific results frameworks and theories of change to help to ensure activities lead to the outcomes and impact required. These are reviewed and updated regularly. Each year all programmes are subject to an annual review. Individual projects will also have their own results framework and specific approach to tracking progress appropriate to the delivery mechanism of the project. Implementing partners undertake their own MEL to support results management and ensure that evidence and learning guide project decision making. Learning sessions on specific topics (eg MEL, Gender, Equality and Social Inclusion (GESI), value for money) – provide deeper learning. Annual workshop to bring brings together those working across the GGF alongside colleagues from wider programmes. This work will be supplemented by an external evaluation by ECORYS considering humanitarian interventions.

Financial information

Initial allocations have been set internally to deliver the priorities set out in the International Development Strategy (May 2022) and the Integrated Review Refresh 2023, based on the FCDO’s Spending Review 2021 settlement.

The department’s spending plans for the period 2022 to 2023 to 2024 to 2025 have been revisited to ensure His Majesty’s Government continues to spend around 0.5% of Gross National Income (GNI) on ODA. This was in the context of the significant and unexpected costs incurred to support the people of Ukraine and Afghanistan escape oppression and conflict and find refuge in the UK, and others seeking asylum. The Government provided additional resources of £1 billion in 2022 to 2023 and £1.5 billion in 2023 to 2024 to help meet these unanticipated costs. The Government remains committed to returning ODA spending to 0.7% of GNI when the fiscal situation allows, in line with the approach confirmed by the House of Commons in July 2021.

The country development partnership summaries include the breakdown of programme budgets allocated to individual countries for 2023 to 2024 and 2024 to 2025. These allocations are indicative and subject to revision as, by its nature, the department’s work is dynamic. Programme allocations are continually reviewed to respond to changing global needs, including humanitarian crises, fluctuations in GNI and other ODA allocation decisions.

It should be noted that these figures do not reflect the full range of UK ODA spending in these individual countries as they do not include spend delivered via core contributions to multilateral organisations, or regional programmes delivered by the FCDO’s central departments. Other UK Government departments also spend a large amount of ODA overseas. Details of ODA spent by other UK government departments can be found in their Annual Report and Accounts and the Statistics for International Development.

FCDO Official Development Assistance allocations

Figure 1. Moldova forecast for 2023 to 2024, split by sector country managed bilateral spend: Humanitarian, 82%; Governance and Institutions, 7%; Climate Change, 6%; British International Investment, 5%

Allocated ODA budget for financial year 2023 to 2024	Indicative ODA budget for financial year 2024 to 2025
£12 million (plus regional humanitarian)	£6 million

Supporting information sources

• British Embassy Chisinau
• FCDO Development Tracker
• D-portal.org
• FCDO evaluation repository