Moldova Secures 5 Million Euro Loan Agreement with Polish BGK

In a significant development aimed at boosting economic growth and supporting small and medium-sized enterprises (SMEs), the Government of the Republic of Moldova has successfully negotiated a 5 million Euro loan agreement with Bank Gospodarstwa Krajowego (BGK). The project was initiated with the approval of the Cabinet of Ministers, which appointed a team of negotiators led by the Minister of Economic Development and Digitalization, Dumitru Alaiba.

This landmark agreement, which is further supported by a grant from the European Commission to subsidize the interest on the loan and provide technical assistance, marks a crucial step toward Moldovan authorities attracting long-term financial resources from the Organization for Enterprise Development (ODA) to finance low-cost investment projects in enterprises. The financial assistance will be channeled through the Entrepreneurship and Economic Growth Fund (FACEM) to facilitate SMEs’ access to concessional and long-term financing with interest rates below market levels.

The terms of the agreement specify that Bank Gospodarstwa Krajowego (BGK) will extend a 5 million Euro loan to Moldova over a period of 7 years, including a grace period of 12 months for repayment. The fixed interest rate on the loan will be set at 0.5% per annum, with the remaining interest (up to the contractual rate) covered by the European Commission through the approved grant to BGK for this purpose.

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The loan will be made available to the Ministry of Finance, which will subsequently allocate these funds to ODA/FACEM for onward lending to beneficiaries through participating financial institutions. FACEM will finance investment projects in enterprises through these participating financial organizations. Repayment of the loan will occur quarterly in equal installments of 208,333 Euros. Importantly, this agreement does not entail any expenses from the state budget, and the credit risk will be borne by the participating financial organizations.

This strategic partnership between the Republic of Moldova and Bank Gospodarstwa Krajowego, supported by the European Commission, aims to stimulate economic growth, create opportunities for local businesses, and enhance the overall economic resilience of Moldova. The agreement is expected to play a pivotal role in driving economic development, particularly for SMEs in the country, by providing them with access to affordable and long-term financing options.

Minister Dumitru Alaiba expressed his optimism about the agreement, stating, “This loan agreement represents a significant milestone in our efforts to support the growth and development of Moldovan enterprises. It will enable us to finance projects that will drive economic progress and create jobs, ultimately contributing to the prosperity of our nation.”

With the necessary approvals in place and a commitment to fiscal responsibility, Moldova is well-positioned to leverage this financial opportunity to the fullest, advancing its economic development goals and promoting a thriving entrepreneurial ecosystem within the country.

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