External financial support received by the Moldovan Government in 2022 amounts to 17.7 billion lei, of which 4.54 billion lei in the form of grants and 13.16 billion lei in the form of loans. Recalculated in USD at the average exchange rate, external support in 2022 amounts to USD 920 million, which is USD 400 million or 80% more compared to the previous record set in 2021 when the external financial support provided to the Government of Moldova amounted to USD 518 million USD. And compared to the minimum in 2018, the external financial support in 2022 was 17 times higher. This is what the economic expert Veaceslav Ioniță analyzed.
Of all external support, 25% came in the form of grants, and the remaining 75% in the form of loans. We must note that external loans in 2022 were a lifeline for the government when the interest rate on domestic loans rose to 22-24% annually. Foreign borrowing allowed the Government not to increase its domestic debts and even managed to reduce them a little.
FOR THE MOST IMPORTANT NEWS, SUBSCRIBE TO OUR TELEGRAM CHANNEL!
High interest rates on domestic loans taken in previous years generated enormous domestic debt servicing costs. Thus, in 2022, only the interest for internal loans amounted to 2.16 billion lei. Under these conditions, the external loans from 2022, in an unprecedented volume, allowed the Government to save in 2022-2023 at least 1.5 billion lei, the money needed to pay interest on domestic loans.
If we return to grants, then in 2022 they constituted the maximum in the last 8 years. The previous record was set in 2014, when the number of grants received by the Government of Moldova amounted to 288.2 million USD.
Relative to GDP, the potential for increased external support in the form of grants is at least double that achieved in 2022. Last year, the grants reached a share of 1.6% of GDP, which is 8.5 times more than in 2018 or 5.5 times more than in 2020, but 2 times less than the peak reached in 2014 when grants reached 3% of GDP.