Moldova: US report warns on 'endemic corruption' risk to economy
Moldova has made progress in economic and democratic reforms but continues to face serious challenges from endemic corruption, excessive bureaucracy, and an unstable judiciary, a new US State Department report warns.
The report, the 2025 Investment Climate Report published in September, describes the country as having "significant growth potential" linked to its European Union (EU) integration efforts. However, this potential is "limited" by low productivity, the exodus of young workers, weak institutions, and ongoing high-level corruption.
Corruption a 'main obstacle'
In a chapter on governance, the State Department says that corruption remains endemic despite government-led reforms.
“The Government has taken important steps to investigate and sanction corruption, but progress is slow. Moldova continues to be affected by a high level of corruption that undermines public trust and slows down economic development,” the document states.
The report notes that Moldova ranks 76th out of 180 countries in the 2024 Corruption Perception Index (CPI), its best score in the last decade. However, it adds that "courts remain vulnerable to political influence and are perceived as non-transparent."
Key reforms mentioned include the vetting of judges and prosecutors, the creation of specialised court panels for corruption cases, and measures for the confiscation of unjustified assets.
Call for reform to be 'completed'
Ilie Chirtoacă, President of the Legal Resources Centre from Moldova (CRJM), said the report "objectively reflects the correct direction" of the Moldovan justice system, but warned of stagnation risks.
“It is very important that justice reform does not stop here,” Mr Chirtoacă commented to Teleradio-Moldova. “The reforms are correct, but to increase public trust, concrete results are needed — real convictions for those who looted the banking system.”
He added that the report highlights the “need to strengthen the independence of prosecutors” and cautioned against the planned merging of the Anticorruption Prosecutor's Office with the Prosecutor's Office for Combating Organized Crime and Special Cases (PCCOCS), warning of a “risk of weakening institutional specialisation.”
Fragile economy needs foreign support
The Moldovan economy has “not fully recovered from the 4.6% decline in 2022,” which was driven by the energy crisis and trade disruptions caused by the war in Ukraine. Economic growth in 2024 was only 0.1%.
The State Department notes the economy faces challenges including low productivity, labour migration, endemic corruption, and an inefficient network of State-Owned Enterprises (SOEs).
Economist Marin Gospodarenco affirmed that attracting investment is the only realistic path to breaking out of stagnation, stressing the need for the state to send a clear signal of stability and predictability to investors.
“It's not enough to offer tax incentives if the business environment is hampered by bureaucracy and instability. The first step must be the complete digitalisation of public services and the reduction of unnecessary procedures,” he argued.
He warned that without a functional justice system, investors will remain reticent. “The choice is ours, and time is running out,” Mr Gospodarenco emphasised.
The report highlights the €1.9 billion European Union financial package, approved in 2024, as a key element of Moldova's European integration process, noting that over 80% of Moldovan exports now reach EU and other non-Russian markets.
Financial sector cleaner, but credit access limited
Following the 2014 banking crisis, authorities “significantly cleaned up the banking sector and improved transparency.” Non-performing loans are now below 5%.
However, the report notes that “access to credit remains difficult for small and medium-sized enterprises (SMEs) due to the high collateral required and high interest rates, of approximately 9%.”
Washington reaffirms its support for the Republic of Moldova’s European course, but long-term success “will depend on reducing corruption, institutional transparency, and the independent functioning of the justice system.”
Translation by Iurie Tataru
