Inflation in Moldova fell by 30% after the decrease in dependence on Russian gas. Anca Dragu: “We have seen the reduction in prices”

The Republic of Moldova has witnessed a remarkable decline in inflation, plummeting from 34% to 4% over a year and a half. Anca Dragu, the Governor of the National Bank of Moldova (NBM), attributed this resurgence in purchasing power primarily to bolstering the country’s energy security and independence.

In an exclusive interview with Euronews Romania, Anca Dragu underscored the importance of maintaining price stability as the core objective of the NBM. “I’m proud to announce that Moldova has achieved an inflation rate slightly above 4%, a significant drop from 34.3% in October 2022. Currently, we stand at slightly over 4%, which has enabled us to reduce the monetary policy rate—the base rate—to 3.75%,” affirmed the Governor.

She elucidated that within the three months since assuming her role, various factors have contributed to the downward trajectory of inflation in the Republic of Moldova.

“The disinflation process has been substantial throughout 2023, prompting a gradual decline in interest rates from nearly 20% to 3.75%. There are multiple contributing factors, with the primary impetus stemming from enhancements in energy security and independence,” elucidated Anca Dragu.

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According to her assessment, the pivotal factor exacerbating inflation was the country’s reliance on Russian gas, which caused price surges and a pervasive sense of insecurity.

“By identifying alternative solutions—such as integrating Moldova into the European electricity transmission network, establishing gas interconnections, and implementing gas storage facilities in Romania and Ukraine—we’ve alleviated pressure on energy prices, leading to a general reduction in prices and disinflation,” Anca Dragu stressed.

Anca Dragu also highlighted the government’s initiatives to assist vulnerable populations in meeting their utility bills. It further contributed to the downward trend in regulated prices, particularly for electricity and natural gas.

“This concerted effort has significantly bolstered the downward trajectory of regulated prices, thereby making a substantial contribution to overall disinflation,” elucidated the NBM governor.